M&S is expecting a £300m hit to profits due to the ongoing cyberattack inhibiting its online orders and affecting store availability.
While the retailer said food availability in stores was now starting to improve, it expects the online disruption to continue into July.
CEO Stuart Machin said the company had net funds of over £400m, putting it in its “best financial health for nearly 30 years”.
It expects to mitigate about half the £300m impact through cost management, insurance and “other trading actions.”
Machin himself is expected to lose over £1m from his pay package after the cyber-attack knocked over £1bn off the company’s market value.
“This incident is a bump in the road, and we will come out of this in better shape, and continue our plan to reshape M&S for customers, colleagues and shareholders,” said Machin.
Dan Coatsworth, investment analyst at AJ Bell, pointed out there was still a big unknown regarding a potential fine from the Information Commissioner’s Office (ICO), which enforces data protection regulation.
The maximum fine is £17.5m or 4% of annual turnover, whichever is higher. For M&S, this could mean anything up to £552m.
“That’s in a worst-case scenario, and any fine would account for many different factors,” Coatsworth said. “We’re unlikely to find out in the near term if there will be a fine as there will be investigations galore into exactly what’s happened and into the retailer’s overall data protection capabilities.”
M&S released the figures as it reported annual sales up 6.1% to £13.9bn for the year to 29 March, while profit before tax and adjusting items was up 22% to £875m.
Food continues to be its strongest performer, with sales up 8.7% to £9bn. Fashion, home and beauty saw sales rise 3.5% to £4.2bn.
However, the retailer’s joint venture with Ocado continues to be a source of trouble, with M&S revealing its investment in the joint venture had suffered a £250m writedown after the company was valued earlier in the year.
M&S now estimates the recoverable value of its share at £385m, down from over £600m previously.
Ocado’s revenue continues to grow – up 15.5% to £2.8bn – though it is still unabe to make a profit. Its losses racked up to £28.7m for M&S last year, with its products still representing just 30% of total volume shipped.
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