Marks & Spencer profits more than halve after cyber-attack | Marks & Spencer

Marks & Spencer’s profits have fallen by more than half after the retailer suffered a damaging cyber attack affecting its still struggling clothing and homewares business.

The retailer said underlying profits fell by more than half to £184.1 million in the six months to September 27, from £413.1 million the year before, after it was forced to halt online clothing and homeware orders for more than six weeks.

The company’s clothing and home goods sales decreased by 16.4% in the first half of the year. The retailer said its division was “slower” to recover from the hack than its food arm.

M&S said fashion sales in stores had been “impacted by fewer footfalls due to reduced stock availability and the absence of click and collect” but that warehouse systems have now been reinstated, “increasing the availability of both our website and stores and trading is picking up”.

Food sales rose 7.8 per cent in the first half of the year, slightly better than expected, and the retailer said it had “largely recovered” from the effects of the attack. Group sales rose 22% to £7.96bn.

“We are confident that we will recover and move forward by the end of the financial year.” [in March]” it was said in a statement.

M&S said profits were helped by a £100m recovery in cyber insurance, but took a £50m hit due to the new packaging recycling tax and additional insurance costs. It plans to make £600 million in cost savings this year as it struggles to keep annual profits steady; this is £100 million more than previously planned.

Despite cost cuts, M&S opened six stores in the six months to the end of September and plans to open a further 12 by March.

M&S chief executive Stuart Machin said: “We expect profits in the second half to be at least on par with last year. This should provide us with a springboard into the new financial year and set M&S ​​up for further growth.”

“The retail sector faces significant headwinds – cost increases from new taxes were over £50 million in the first half – but there is much under control and accelerating our cost-cutting program will help alleviate this.

“Our plan to reshape M&S for long-term sustainable growth remains unchanged, our ambitions remain undiminished and our determination to persist and succeed is stronger than ever.”

Last week, M&S rival Next revealed sales and profit growth was “materially above” expectations, raising hopes that UK consumers are still willing to spend despite pressures on household budgets.

M&S said in May it expected its profits to take an estimated £300 million hit this year due to the damaging cyber attack. However, it was stated that the financial impact of the attack was expected to be halved to around £150 million through insurance, cost reductions and other actions.

An attack on M&S’s IT systems over the Easter weekend forced the retailer to halt orders through its website, where it sells fashion, homewares and gifts, for more than six weeks.

Delivery of food and fashion items to stores and some deliveries to online grocery partner Ocado have also been disrupted.