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The Star
22-05-2025
- Business
- The Star
M&S has more to worry about than its recent hacker attack
THIS isn't just a cyber attack, it's an M&S cyber attack. To borrow a phrase from the retailer's famous food ads, Marks and Spencer Group Plc has been hit hard by the spate of hacks of retailers' information-technology systems. The company said on Wednesday the incident last month, which it described as 'highly sophisticated', would cost it about £300mil or about US$402mil in operating profit in the year to March 2026, before any cost savings, or recovery under insurance policies, which could be half of the total. The retailer needs to convince investors that the worst is behind it. Hyperactive chief executive officer Stuart Machin said he will use the incident as an opportunity to modernise M&S faster and more extensively, compressing two years of technology progress into six months. He needs to show that M&S is finally getting a handle on the situation and can get back on track – and quickly. The financial impact from the cyberattack overshadowed a successful year for the high street stalwart. Pre-tax profit before one-time charges in the year to March 29 rose to £875.5mil, the highest for 15 years years, from £716.4mil in the year earlier. The company also had net cash of £437.8mil at the end of the financial year, before lease liabilities, showing how the it has strengthened its balance sheet. Although the current financial year began well, the incident forced M&S to pause online sales in fashion, beauty and home furnishings. The company expects disruption to continue through June and July, although Machin said he hoped to restore services earlier. Bloated inventories Stores have continued to be busy, but the company expects to incur 'increased stock management costs'. In other words, it will have to discount bloated inventories. In food, it has been hurt by gaps on shelves, although this has now improved. It has also incurred higher waste and logistics costs, because it has had to operate many tasks manually. The problems could not have come at a worse time. Britain has basked in a rare heatwave, which has driven shoppers to buy summer dresses, shorts and sandals. Next Plc last week upgraded its profit forecast after the warm conditions lifted sales. It may also be benefiting from M&S' woes. While the cyber incident will naturally capture attention, it isn't the only question mark over M&S' continued progress. It has endured a series of management departures since Machin became chief executive three years ago. The latest to leave is Richard Price, managing director of clothing, home and beauty, who was instrumental to M&S' fashion turnaround. He has been replaced by former Primark and Boohoo executive John Lyttle. But the biggest potential challenge would be when Archie Norman, chairman, and the architect of its recovery, eventually steps down. He took on the role in 2017, so is approaching nine years on the board, the recommended maximum tenure. While M&S' food business has been flying, it still needs to stem losses at its online joint venture with Ocado Group Plc. On Wednesday M&S announced a non-cash charge of £248.5mil on its investment in Ocado Retail. Finally, while M&S has no doubt made strides in its business, for example making its clothes more fashionable and making its food better value for money, it has been helped by the broader retail backdrop. Many competitors, such as Debenhams and Arcadia's brands including Top Shop and Dorothy Perkins have left the high street. The John Lewis Partnership, owner of John Lewis department stores and Waitrose have also struggled. Competition awaits But now John Lewis has a seasoned retailer, Jason Tarry, as chairman and a talented executive, Peter Ruis, running the department store arm. John Lewis will become more of a threat. M&S shares have lost close to 10% since it announced the cyber attack on April 22. Ironically, they had just topped 400 pence, a psychological level for investors, as this is what Philp Green was believed to have offered for the group in 2004. M&S trades on a forward price-earnings ratio of about 12 times, a significant discount to Next's about 18 times. To close the gap, Machin needs to convince investors that the incident is as he describes it a 'bump in the road', and that M&S will emerge stronger. Otherwise, the retailer will go back to the archives in another way: Just when the household name finally gets its act together, it goes off the rails again. —Bloomberg Andrea Felsted is a Bloomberg Opinion columnist covering consumer goods and the retail industry. The views expressed here are the writer's own.
Bloomberg
09-05-2025
- Business
- Bloomberg
Next CEO Wolfson Sells £12.4 Million of Shares at Near-Record
Next Plc Chief Executive Officer Simon Wolfson sold £12.4 million ($16.4 million) of shares in the British clothing and homewares retailer, as the company's guidance boost sent the stock to a record high. Wolfson sold 100,000 shares at £123.62 on Thursday, Next said in a regulatory filing. The sale makes up just under 10% of his holding of about 1 million shares, according to data compiled by Bloomberg. The company's stock extended a drop after the filing was published on Friday, before paring losses.
Bloomberg
08-05-2025
- Business
- Bloomberg
Next Raises Guidance Again as UK Customers Buck Economic Gloom
Next Plc raised its profit guidance for the second time this year as stronger-than-expected sales in the UK defied the weak consumer sentiment that's affecting rivals. The British fashion and homewares company now expects £1.08 billion ($1.4 billion) of pretax profit in the year ending January 2026, up from its previous forecast of £1.07 billion, according to a statement Thursday. Next also said it sees full-price sales this year rising 6%, up from its previous guidance of 5%.
Bloomberg
23-04-2025
- Business
- Bloomberg
UK Reviews Duty Exemption for Parcels After Trump Shuts Loophole
The UK plans to review the duty-free status of low-value imports after President Donald Trump's tariffs raised fears that a flood of Chinese products could be rerouted from the US into Britain and neighboring markets. Chancellor Rachel Reeves announced an examination of the so-called de minimis rules, under which goods valued at £135 ($179) or less can be imported into the UK without customs duty. The move comes after British retailers including fashion and homeware chain Next Plc and grocer J Sainsbury Plc called for the loophole to be addressed, arguing that it allows international companies to undercut them.
Bloomberg
28-03-2025
- Business
- Bloomberg
Next Can Break the £1 Billion UK Profit Curse
Simon Wolfson, chief executive officer of Next Plc, on Thursday announced pretax profit of £1 billion ($1.3 billion) for the first time in the retailer's history. It's a level of earnings few British store chains reach. For some that have, it has been the prelude to a period of disappointment. But Next can escape the curse of the £1 billion profit retailer. Next's biggest rival Marks & Spencer Group Plc is perhaps best known for suffering from this affliction. The high street stalwart hit the magic number in 1997 and 1998, when it was enjoying a surge in fashion sales, which then accounted for the bulk of its revenue and was very profitable. But to reach that target, M&S invested more in its bodysuits and blazers than in equally stylish stores. Customers eventually noticed. By 1999, after a damaging succession battle, profit had halved.
