M&S raises dividend after profit surge – despite cyber hit
Marks and Spencer has boosted its dividend after reporting profit at a 15-year high, despite the significant impact of its ongoing attack.
M&S told investors it would raise its yearly dividend by 20 per cent to 3.6p this year.
The dividend boost came after the high street darling told markets that profit before tax and adjusting items rose 22.2 per cent to a 15-year high of £875.5m in the 52 weeks to March 29, from £716.4m the year before.
The company’s share price rose by 2.73 per cent on Wednesday.
Along with investors, analysts responded positively to the figures, with Shore Capital saying the company had “blown the doors off, again”.
“These are very high-quality results, indeed they have been for several years, and we wholly commend Stuart Machin and his leadership team on their delivery,” Shore Capital said.
Fashion, Home & Beauty sales – a segment M&S has poured serious resources into in the last few years – rose 3.5 per cent to £4.2bn.
Food sales increased 8.7 per cent to £9bn, with like-for-like growth of 8.6 per cent driven by UK volume growth of 6.7 per cent, with “strong growth” in core categories, M&S said.
Market share was up 0.27 per cent to 3.9 per cent.
Peel Hunt analysts said the results were “beyond superlatives”, with food and clothing both “on fire” and profit before tax “beating expectations by an embarrassing amount”.
However, the broker said it fears “momentum will take longer than the company does to return” after its cyber attack.
Analysts downgraded the company to a ‘Hold’ and reduced its target price to 360p – albeit “with a heavy heart”.
Cyber attack to hit profit by £300m
It has been almost a month since the FTSE 100 firm first updated markets about a “major cyber incident”, thought to be related to the hacking group Scattered Spider.
The company told investors that the attack will blow a £300m hole in its earnings this year.
It expects the £300m impact on 2056/2026 profit to be reduced through “management of costs, insurance and other trading actions”.
M&S said it expects online disruption to continue throughout June and into July.
Online orders, as well as click and collect payments, have been down for the last three and a half weeks.
The lack of online orders has “heavily impacted” trading profit, the company said, as have costs associated with reduced food availability and waste.
The Co-op, Harrods and Dior have all been affected by cyber attacks in the last month, although M&S appears to have been the hardest hit so far.