Marks & Spencer (M&S), the venerable British retailer with a 141-year history, has spent much of 2025 battling the fallout from a devastating cyber attack that nearly erased its profits and sent shockwaves through the UK retail sector. The attack, which struck around Easter, forced the company to take its website offline for six weeks, halt online clothing orders for seven weeks, and suspend click-and-collect services for nearly four. The impact was immediate and severe: online home and fashion sales plunged by more than 40%, with online orders specifically down 42.9%, and in-store sales slipping 3.4% as logistics disruption led to empty shelves, according to coverage by the Press Association.
The financial toll was staggering. In the six months to September 27, 2025, statutory pre-tax profits collapsed by more than 99%, plummeting from £391.4 million to just £3.4 million, as reported by The Standard. Adjusted pre-tax profits tumbled 55.4% to £184.1 million from £413.1 million the previous year. The retailer estimated the cyber attack cost it £324 million in lost sales—slightly higher than its initial £300 million estimate—and the hit to profits is expected to reach around £136 million for the year, with an additional £34 million in related costs anticipated in the second half.
Customer data was also compromised in the breach, with hackers stealing information that could have included names, email addresses, postal addresses, and dates of birth. While M&S quickly moved to shore up its defenses, the hack was ultimately traced back to “human error,” as confirmed by chief executive Stuart Machin. The company responded by firing Tata Consultancy Service, the IT outsourcer responsible for its IT service desk at the time of the incident.
Despite the chaos, M&S’s underlying business fundamentals and swift management response have helped the retailer steady the ship. The company received a £100 million insurance payout to offset some of the losses from the cyber incident, and its food division proved resilient. Food sales rose 7.8% in the first half of the year, buoyed by increased shopper numbers and new product launches, though margins were squeezed by markdowns and waste, a result of the temporary manual stock allocation processes put in place during the IT outage. Operating profits in the food division fell almost 60% to £58.8 million, but performance is now approaching pre-attack levels, according to Proactive Investors.
The fashion, home, and beauty arm of the business, however, bore the brunt of the damage. Profits in this segment plummeted by more than 80%, from £243.4 million to £46.1 million, with sales down 16.4% to just under £1.7 billion. The halt in online trading not only hurt M&S’s own results but also allowed competitors such as Next to gain market share, as customers sought alternatives during the period of disruption.
Machin, for his part, has remained resolute. “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,” he told reporters, as cited by the Press Association. He added, “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.”
Looking ahead, Machin expressed confidence that profits in the second half would be “at least in line with last year,” despite facing a raft of headwinds including a new packaging tax, higher employer National Insurance contributions, and broader economic uncertainty. Rising costs in the first six months alone amounted to £50 million. To mitigate these pressures, the company is accelerating its cost-cutting target to £600 million, with a focus on operational efficiency and supply chain improvements.
While the cyber attack was a major setback, M&S’s recent performance marks a significant turnaround from its near-collapse a decade ago. The group had just achieved its highest annual profit in over 15 years in the 2024/25 financial year, thanks to a comprehensive turnaround plan launched in 2022 under Machin’s leadership. Shore Capital, the company’s house broker, remarked that “weaker businesses would not have emerged as robust as M&S to the malevolent challenges” it faced this year.
Investors, however, remain cautious. On November 5, 2025, shares slipped about 3% in early trading despite results described by analysts as “better than feared.” Still, M&S raised its interim dividend by 20% to 1.2p a share—a move seen as a sign of management’s confidence in future cash flow. Net cash stood at £176 million, though total debt (including leases) ticked up slightly to £2.5 billion.
M&S is pressing ahead with its store renewal program, opening 15 new shops in the first half of the year and planning another 20 by year-end, including two full-line outlets in Bath and Bristol. The company is also investing in logistics and technology, with a £340 million food distribution centre in Daventry slated to open in 2029—a clear bet on the future of its food business and online operations.
Machin told reporters that recovery in the fashion, home, and beauty business has been slower than in food, but “we are making progress every day.” Online sales have been improving since the resumption of home delivery in June and click-and-collect in August. The company expects overall trading to be fully recovered by the end of the financial year, setting the stage for a “solid base to springboard into a new financial year starting April and set M&S up for further growth.”
Amid speculation, Machin clarified that M&S has no plans to acquire the remaining 50% of Ocado Retail, its online grocery joint venture with Ocado Group. “No, we’ve never had a discussion, and it’s not on my mind,” he said, emphasizing that M&S has “other things to do with our shareholder money and plenty to go at.”
Industry observers note that while M&S has weathered the cyber storm better than many feared, the coming months will be crucial. With consumer demand softening and the threat of higher taxes looming—Chancellor Rachel Reeves has warned, “we are all in this together,” widely interpreted as a signal for potential Treasury action—investors are watching closely. Shore Capital trimmed its 2027 profit forecast by 2.5% in response to these uncertainties, but argued that continued progress could help close the valuation gap between M&S and rivals like Next and Tesco.
For now, the iconic retailer’s resilience and swift response have bought it time to rebuild digital momentum and restore customer trust. The scars of the hack may linger, but M&S’s determination to adapt and grow suggests the story is far from over.
