UK's Marks & Spencer sees 22.5% sales growth in H1 despite cyber hit

The adjusted profit before tax (PBT) fell 55.4 per cent to £184.1 million from £413.1 million, while statutory profit before tax plunged 99.1 per cent to £3.4 million. The decline reflected lower online sales, elevated waste and markdowns, and £101.6 million in incident-related costs, which formed part of total adjusting items of £167.8 million. Insurance proceeds of £100 million (~$130 million) were recorded centrally, partially offsetting the financial hit.

Section-wise, fashion, home and beauty saw sales drop 16.4 per cent following a temporary halt in online trading from April to June. Operating profit fell to £46.1 million (margin 2.7 per cent versus 12 per cent last year). With warehouse systems now restored, both online and in-store availability have improved, and trading is gradually recovering, M&S said in a press release.

International sales declined 11.6 per cent, generating £13.3 million in operating profit (margin 5.2 per cent). The division advanced its restructuring, launching new wholesale and franchise models to drive future growth.

Despite reduced profits and working capital outflows, M&S maintained a robust balance sheet, closing the half with £176.1 million in net funds (excluding lease liabilities) and over £1.6 billion in cash and liquidity. Free cash flow turned negative at £193 million, while net debt rose 16.7 per cent to £2.53 billion. The interim dividend was raised 20 per cent to 1.2 pence per share, reflecting confidence in recovery.

The company also announced to open 18 new stores by the end of the financial year—six of which are already operational. M&S has lifted its cost reduction target to £600 million to help counter inflation and regulatory pressures.

“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,” said Stuart Machin, chief executive at Marks & Spencer. “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.”

The company expects its second half (H2) profit to be at least in line with the previous year as the residual impact of the cyber incident continues to fade, positioning the company for a full recovery by the financial year-end. It remains focused on disciplined capital allocation, targeted execution, and sustained investment to drive long-term growth.

Despite facing external pressures such as over £50 million (~$65 million) in new tax-related costs during the first half, M&S is accelerating its £600 million (~$780 million) cost-reduction programme to offset these challenges. Management believes the company is well placed to regain momentum in the second half, providing a strong foundation for the next financial year, added the release.

ALCHEMPro News Desk (SG)