By Basant El-Faramawy
Marks & Spencer reported that adjusted pre-tax profits more than doubled in the first half of its financial year, driven by a strong recovery in food sales and a rebound from last year’s cyber attack, though the retailer warned of mounting cost pressures.
Profit surge and revenue growth
Adjusted pre-tax profit rose to £403.2 million for the 26 weeks to September 26, up from £184.1 million a year earlier. Total sales increased 16.2% to £9.25 billion. The food division led growth with a 13.9% sales jump, supported by an 11.9% rise in volume sales and new store openings. Fashion, home and beauty sales grew 17.5% year-on-year, aided by the restoration of online operations after the cyber incident.
Cyber attack aftermath
Last year’s cyber attack forced M&S to halt online sales for about six weeks and caused empty shelves due to logistics disruption. The company said the “long-tail impact” of the incident continued to affect product availability in its fashion, home and beauty business. An extended period of hot weather over the summer also dampened store sales.
Cost pressures
M&S absorbed roughly £35 million in additional costs from higher packaging taxes, increased pay and national insurance contributions, and supply chain disruption linked to the Middle East. Chief executive Stuart Machin described an “onslaught of cost headwinds” but said the company remained focused on its plan.
Outlook
Machin said the group enters the second half in a strong position, citing solid performance in October.
