Marks and Spencer Group PLC (LSE:MKS) shares slipped about 3% in early trading despite results that analysts described as “better than feared,” following a turbulent six months dominated by a major cyber attack that knocked its online operations offline for 46 days.
The retailer reported adjusted pre-tax profit of £184 million for the first half of its financial year, a sharp fall from £413 million a year ago, but comfortably ahead of analysts’ forecasts of around £76 million.
That figure was boosted by a prompt £100 million insurance payout covering losses from the cyber incident in April, which crippled the group’s website and led to weeks of restricted trading.
Even so, the results underline how far M&S has come since its near-collapse a decade ago.
Shore Capital, which acts as house broker, said weaker businesses “would not have emerged as robust as M&S to the malevolent challenges” it faced this year.
The company expects to be back to full operational strength by the end of the current financial year, with its food division already close to pre-attack performance levels.
Chief executive Stuart Machin said the group had “so much more to do and so much opportunity ahead,” but the immediate focus remains on restoring momentum in its fashion and home arm, which was hit hardest when online trading stopped.
Food sales rose 7.8% in the half-year, helped by more shoppers and new product launches, though margins were squeezed by markdowns and waste.
By contrast, fashion, home and beauty sales fell 16% after online orders plunged 42%. The division’s operating profit tumbled to £46 million from £243 million a year earlier.
ShoreCap expects full-year adjusted pre-tax profit of £655 million, including the insurance settlement, and at least flat profit growth in the second half compared with last year’s £468 million. Underlying profit, excluding the payout, is forecast at £555 million.
The company raised its interim dividend by 20% to 1.2p a share, a move analysts said demonstrated management’s confidence in cash flow. Net cash stood at £176 million, although total debt, including leases, increased slightly to £2.5 billion.
Despite the disruption, M&S is pushing ahead with its store renewal programme. Fifteen shops opened in the first half, with another 20 planned by year-end, including two new full-line outlets in Bath and Bristol.
Investment in logistics and technology is also continuing, including a £340 million food distribution centre in Daventry set to open in 2029.
Still, the road ahead looks far from certain. ShoreCap trimmed its 2027 profit forecast by 2.5% amid fears of higher taxes and softer consumer demand after Chancellor Rachel Reeves’ warning that “we are all in this together". This is seen as a prelude to a Tresury raid on earnings.
M&S shares, at about 374p (down 10.5p), trade on roughly 11 times expected 2027 earnings, a discount to Next and Tesco. Analysts argue that ongoing progress could narrow that gap.
For now, today’s dip in the share price suggests investors are reserving judgment.
M&S may have weathered the cyber storm better than expected, but the next few months will show whether it can fully reclaim the digital momentum it worked so hard to build.