A catastrophic cyber attack almost wiped out profits at Marks & Spencer in the first half of the year.
The high street giant today revealed that statutory pre-tax profits collapsed by more than 99% from £391.4 million to just £3.4 million in the six months to 27 September.
Adjusted pre-tax profits slumped 55.4% from £413.1 million to £184.1 million.
Chief executive Stuart Machin said: “The first half of this year was an extraordinary moment in time for M&S. However, the underlying strength of our business and robust financial foundations gave us the resilience to face into the challenge and deal with it. We are now getting back on track. Change, on the other hand, is not a moment. Change is constant and that is why we are resolute in our ambition to reshape M&S for growth.”
Machin said profits in the second half are expected to match last year’s figure despite rising costs, which amounted to £50 million in the first six months. These included higher employer National Insurance contributions and the new packaging tax.
The company said: “We are confident we will be recovered and back on track by the financial year end.”
A one-off provision of £167.8 million included £101.6 million of costs directly related to the disastrous hack in April, which led to its website being closed to customers for six weeks.
Last week Marks sacked Tata Consultancy Service, the IT outsourcer that ran its IT service desk at the time of the hack.
Food sales were up by 7.8%, or 2.8% in volume terms, but operating profits were down by almost 60% at £58.8 million.
Marks said this was “largely due to higher markdown, waste and stock loss caused by temporary manual stock allocation. With systems now restored, these have reduced, and operational metrics have improved”.
The fashion and home side of the business suffered an even bigger fall in profits. They fell by more than 80% from £243.4 million to £46.1 million. Sales were down 16.4% to just under £1.7 billion.
