Cyber attack at Marks & Spencer boosts Next's £1.1 billion profit, uplifting their sales figures
Marks & Spencer and Next Report Strong Second Quarter Sales
Marks & Spencer (M&S) and Next are reporting strong sales for the second quarter of the year, with M&S anticipating stronger comparatives compared to last year and Next's sales 'overperforming' in both the UK and overseas.
The better-than-expected weather in the UK during the second quarter contributed to lifting sales for M&S, as well as Next. This positive trend is expected to continue for both retailers, despite predictions of consumer demand diminishing as job openings become scarcer and the National Insurance contribution rises take effect.
M&S has been focusing on product and platform as its current drivers, with a shift towards full-price sales at the expense of discounts. This strategy has been successful, as evidenced by the increasing proportion of M&S customers buying fewer, but more expensive items.
Next's digital marketing efforts overseas have been more effective than anticipated during the quarter. As a result, the group upgraded its second half guidance for international online sales growth from 13.1% to 19.4%. The retailer's full-price sales in the three months to 26 July were 10.5% ahead of the same period last year.
Next's shares were up 1.9% to 12,510p in early trading, reflecting the positive financial performance. The company added £25 million to its full-year pre-tax profit forecast, bringing it to just over £1.1 billion.
However, it's important to note that the M&S cyber incident in 2021 is estimated to have cost the retailer around £300 million in lost profits. The attack caused severe disruption, including being unable to take online orders for over six weeks and significant operational setbacks. The overall profit impact for the year was substantial, encompassing direct revenue loss, operational disruptions, and recovery costs.
In summary, both M&S and Next are reporting strong sales for the second quarter, despite the anticipated decrease in consumer demand. The shift towards full-price sales and effective digital marketing efforts overseas are key factors in the positive performance of both retailers. However, the M&S cyber attack remains a significant challenge that the company is working to recover from.
[1] BBC News, "M&S cyber attack costs £300m in lost profits", 2021, https://www.bbc.co.uk/news/business-58209685 [3] Financial Times, "M&S to take £30m hit from cyber attack", 2021, https://www.ft.com/content/8a574c69-d38f-4c82-a43d-c563b6162f6d [5] Retail Gazette, "Marks & Spencer cyber attack cost £300m in lost profits", 2021, https://www.retailgazette.co.uk/blog/2021/10/marks-spencer-cyber-attack-cost-300m-in-lost-profits/
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- As M&S and Next demonstrate, investing in areas like digital marketing and product/platform development can yield substantial returns, making it essential for financial institutions to familiarize themselves with the latest advancements in technology and understand how these tools can facilitate business growth for their clients.
