Marks and Spencer Group PLC (LSE:MKS) said its recent cyber attack is estimated to have a £300 million impact on its new financial year, slamming the brakes on recent progress after the past year saw its largest underlying profit in 15 years.
The high street retailer said it is still working on the recovery from what it called a "highly sophisticated cyber incident", with current efforts focused on restoring systems and operations over the rest of the first half, "with the aim of exiting this period a much stronger business".
The company expects a £300 million impact on operating profit, though it expects some of this will be mitigated through cost control, insurance and trading actions.
Food sales were hit by reduced availability, with additional waste and logistics costs denting profit in the first quarter.
Online sales and profits for Fashion, Home & Beauty products were "heavily impacted" after the group was forced to pause online shopping, though stores were said to have remained resilient.
Online disruption is expected to continue throughout June and into July as operations are restarted, with increased stock management costs in the second quarter.
Chief executive Stuart Machin said: “There is no change to our strategy and our longer-term plans to reshape M&S for growth and, if anything, the incident allows us to accelerate the pace of change as we draw a line and move on.”
For the past year ended 29 March, the group reported an adjusted profit before tax of £875.5 million, up 22% from the previous year, as sales rose 6.1% to £13.9 billion.
Statutory profit before tax, however, fell 24% to £511.8 million due to a £248.50 million non-cash impairment of its investment in its Ocado Retail joint venture, plus costs relating to changes to UK stores and its financial services offering.
Food sales increased 8.7% to £9 billion, with like-for-like sales up 8.6% and the profit margin increased to 5.4% from 4.7% to result in an adjusted operating profit of £484.1 million.
Fashion, Home & Beauty sales were up 3.5% to £4.2 billion, with LFL sales up 4.4%. The profit for this division was £475.3 million as margins swelled to 11.2% from 10.7%.
As free cash flow of £443.3 million was generated from operations, M&S proposed a final dividend of 2.60p, taking the full-year total to 3.60p per share, up 20% year-on-year.