M&S Profits 2025: Retailer Sees Earnings Halve After Major Cyber Attack

British retail giant Marks & Spencer (M&S) has revealed that its M&S profits for the first half of its 2025 financial year have more than halved, following a damaging cyber-attack that disrupted its online operations and forced large one-off costs. The results underscore how vulnerable even long-established retail businesses are in today’s digital world.

What the Numbers Show

In the six months to 27 September 2025, M&S reported an adjusted profit before tax of £184.1 million, down from £413.1 million in the same period a year earlier, representing a drop of about 55 %. Meanwhile, group revenue rose by approximately 22 % to about £8 billion, thanks mainly to its food business and the inclusion of its joint venture with Ocado Retail.

The headline statutory profit before tax was almost wiped out, falling to around £3.4 million compared with nearly £392 million a year earlier. The company booked £101.6 million in direct costs linked to the cyber-attack in the first half, with a further £34 million expected in the second half, bringing the total hit from the incident to roughly £136 million. 

What Happened: The Cyber Attack

The cyber-attack occurred in April 2025, when hackers targeted a third-party service provider connected to M&S, leading to the suspension of online clothing, homeware and gift orders for about seven weeks. 

The company’s click-and-collect services were also disrupted for nearly four weeks. During that time, the retailer’s fashion and home & beauty division saw sales slump by about 16.4 %. M&S believes the attack was orchestrated by a sophisticated threat actor group. 

The disruption hit both online and in-store business, as M&S faced reduced product availability, delayed deliveries, increased waste costs and the need to bring forward major technology upgrades. M&S also claimed about £100 million in insurance proceeds to offset some of the losses. 

Why M&S Profits Were Hit Hard

Several factors combined to produce the drop in M&S profits:

• The fashion, home and beauty division was hit hardest by the online outage and declined sharply.
• Though revenue rose thanks to strong food sales and inclusion of the Ocado venture, the food margin shrank, partly due to increased costs and disruptions. 
• One-off costs and IT investment accelerated in response to the attack, and insurance recoveries only partially offset the impact.
• The cost of meeting regulatory and environmental obligations (such as the new packaging levy) added further pressure. 
• The stock market takes note of such surprises, and the disruption undermined investor confidence temporarily.

What This Means for the Stock Market and Investors

For those doing stock research, M&S’s earnings caution is significant. The sharp drop in profits despite rising sales shows how critical operational resilience is in today’s environment. While M&S is not typically included in conversations about AI stocks, the broader tech-enabled risks that hit M&S point to how even retail stocks can be exposed to cyber threats, digital supply chain issues and shifts in consumer behaviour.

Investors may ask whether M&S has the right digital infrastructure, cybersecurity posture and transformation strategy to avoid similar shocks. The incident also highlights that the stock market now factors in digital risk as part of valuation models for retail, service and manufacturing companies alike.

For M&S shareholders, the message is mixed: the food business is holding up, the company still expects the second half of the year to at least match last year’s profit, and the turnaround remains underway, but the interruption has been painful and could weigh on momentum.

Outlook: Can M&S Recover?

Despite the setback, M&S has expressed confidence. The company says it expects second-half profits to be “at least in line with last year” and believes the disruption is behind it. The leadership argues that before the incident, the retailer was making strong progress under its transformation plan, and that post-incident actions will strengthen its position.

M&S is continuing to invest in its food supply chain (a £349 million investment has been announced), opening new stores, and pushing ahead with its plan to reshape the entire business for long-term sustainable growth. Boosting digital resilience, accelerating technology upgrades and expanding its profit-generating food division are key priorities.

While the cyber-attack has clearly dented results, the resilience of the business and strategic moves going forward may enable M&S to regain ground. For investors, the risk remains elevated, but the company’s response and broader turnaround strategy will determine whether the stock recovers sustainably.

Key Takeaways

1. The M&S profits drop of over 50% in the first half of FY 2025 was driven by a major cyber-attack that forced a pause in online orders and added large one-off costs.
2. Sales rose by ~22% thanks to food and the Ocado venture, but profits still shrank because of margin pressure and disruption costs.
3. The incident shows how digital disruption and cybersecurity risk are now central to retail company performance.
4. For the wider stock market, it serves as a reminder that operational resilience and tech risk are fundamental, not just growth metrics.
5. M&S believes the worst is behind it and expects recovery, but investors will watch closely to see if it delivers on that promise.

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Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.