M&S food sales growth collapses after cyber attack

Telegraph

a day ago

Rapid growth at Marks & Spencer's food business has ground to a halt after the retailer was struck by a devastating cyber attack that left shelves empty.
New figures seen by The Telegraph show that spending in M&S's food halls rose by 0.8pc in the four weeks to May 17 compared with a year earlier. The data covered a period when the retailer was in the initial throes of the hack.
It marks a major slowdown from the rampant growth experienced by the retailer over the past year. According to the unpublished figures from analysts at NIQ, grocery spending at M&S had been up by 11pc in the 12 months to May 17. It has consistently ranked among the fastest-growing supermarkets in recent months.
The NIQ data showed M&S sold fewer items in the four weeks to May 17 compared with the same period last year and its market share slipped to 3.3pc, compared with 3.6pc in the year as a whole.
M&S slipped below Waitrose in the ranks of the largest grocers as a result, having overtaken the retailer for the first time in November.
Previous figures had suggested M&S had escaped a major hit from the cyber attack. Separate data from Kantar recently suggested that M&S grocery sales rose by 8pc in the four weeks to May 18 and by 12.3pc in the 12 weeks to the same date.
Kantar uses a different methodology, which does not include grocery sales from delivery apps such as Deliveroo.
The NIQ survey data shed fresh light on the effect of the cyber attack that has crippled M&S.
M&S was forced to halt online orders in mid-April after being struck by a cyber incident, which also disrupted food deliveries into stores. It led to gaps on shelves and forced the retailer to pause some offers in some stores.
The attack has been blamed on criminal gang Scattered Spider. Stuart Machin, M&S's chief executive, was reportedly directly contacted by the hackers, with an abuse-filled email seen by the BBC allegedly showing hackers gloated about the attack. M&S declined to comment on the report.
Seven weeks after the company disclosed the attack, it is still battling to bring its IT systems back online. M&S has not yet brought back online orders, with disruption expected to continue until July.
The retailer has already admitted that the attack will knock an estimated £300m off its profits this year, dealing a setback to Mr Machin's efforts to rapidly grow the retailer.
Clive Black, an analyst at Shore Capital, said the hit to food sales was to be 'wholly expected post the cyber incident, when considerable disruption to store operations was evident, meaning lots of gaps at time, famine and feast in terms of product coming into stores managed by manual rather than automated processes'.
However, he suggested M&S was likely to experience a 'robust bounce back' once the IT issues were resolved.
Richard Hyman, a partner at Aria Intelligent Solutions, added: 'If there was ever a good time for this to happen to M&S, it's now when they're in a position of strength. If this had happened several years ago, I think that one would be much more worried about them.'
A spokesman for M&S said: 'We have made good progress in growing our food business and gaining market share over the long term. The most recent Kantar report shows market share growth of over 12pc, which is ahead of the market and underlines our resilience.
'Our stores are back to normal for our customers and have been for some time. We are getting on with providing the best quality products and service for our customers. In fact, just this week, we have launched 100 new or upgraded M&S Food products for summer.'