Mark Kleinman: This is not just any retail cyber attack…
Mark Kleinman is Sky News’ City Editor and the man who gets the Square Mile talking in his weekly Morning Wire column
This is not just any retail cyber attack…
It’s hardly an exclusive club these days: a big listed company is the victim of a major cyber attack, compromising its systems and ability to continue serving customers.
In the last fortnight, a triumvirate of big retailers, including the Co-op and Harrods, have had their names added to this alarming roll-call.
The perception that it’s not the incident itself which matters, though, as much as how the response to it is orchestrated, is being played out in real-time at Marks & Spencer (M&S).
M&S shareholders are entitled to ask, and receive rigorous answers to questions about, whether the consequences of its ongoing cyber attack were either foreseeable or could have been more adequately prepared for.
Communication from M&S to investors has so far been scant and uninformative. I understand Stuart Machin, the M&S chief executive, has had to change his mobile phone number amid uncertainty about the situation (although the same does not apply to other members of its executive committee, implying there hasn’t been a security breach of Machin’s phone).
Retail industry executives say a long track record of underinvestment in its technology and systems is likely to be at least partly responsible for the chaotic nature of subsequent events.
More than two weeks after the hack – for which a group called DragonForce has claimed responsibility – M&S appears to have little grip on a timetable for returning to normality.
Insurance cover will mitigate the financial cost of then lost sales during the interim period, but what price the reputational damage to a brand which had at last begun to demonstrate confidence again after a troubled two decades in its clothing business?
Archie Norman, the chairman, is facing arguably the toughest challenge of a tenure which must come to an end by autumn 2026 if M&S is to comply with corporate governance guidelines.
He should commission an independent probe into the crisis, including a review of the investment necessary to minimise M&S’s vulnerability to the impact of future such attacks, and whether previous warnings about the company’s preparedness were ignored – and he should publish it in full.
Tucker’s luck at HSBC shaped by decades-worth of events
So, how was Tucker’s luck? In the seven-and-a-half years since Sir Mark Tucker became chairman of HSBC Holdings, entire decades have happened. Brexit, the Covid pandemic, the bookends of two Donald Trump presidential terms, a Chinese activism campaign, Russia’s invasion of Ukraine and an escalating international trade war.
Tucker’s exit, now scheduled to take place by the end of the year, comes as little surprise given that I reported on Sky News back in November that HSBC was about to begin a search for his successor.
In terms of CEO selection, his scorecard is mixed. The initial choice of John Flint to take over from chief executive Stuart Gulliver rapidly proved disastrous. Noel Quinn, initially appointed as interim CEO and who went on to serve for more than five years, was a solid replacement, overseeing the quickfire takeover of Silicon Valley Bank’s UK arm in a 2023 rescue deal.
Tucker’s allies say he is convinced that Georges Elhedery, who succeeded Quinn last year, is the right person to lead HSBC for the next decade.
The bank’s radical reshaping during Tucker’s tenure – with several key disposals and its reorganisation into more distinct geographical and product units – had, until President Trump’s tariffs blitz, resulted in its strongest share price performance for years and the highest profits in its 160-year history.
Tucker will leave HSBC with a strong capital position and international network well-placed to support clients in a rapidly changing world. On the flip-side, doubts persist about whether its unique geographical footprint will throw up yet more challenges. Its next chairman will need Asian experience by the bucketload, and stiff resolve, to deliver more profitability records in Tucker’s wake.
Hovis and Kingsmill knead to prove there is dough in bread
There ain’t much dough in bread these days: that’s the obvious conclusion to draw from the scrutiny of the finances of Kingsmill’s parent, Allied Bakeries, that’s possible. Allied, in turn, is owned by Associated British Foods, and its performance is not broken down by the London-listed group.
That explains why ABF is now orchestrating a merger of the division – which also owns the Sunblest brand and an own-label manufacturing operation with private equity-backed Hovis.
Since being largely delisted by Tesco, Kingsmill’s market share has slumped, leaving it trailing both Hovis and the family-owned market leader, Warburtons.
Merging the second and third-largest players would create a group with just over 40 per cent of the branded sliced bread sector – enough to trigger serious scrutiny from the Competition and Markets Authority.
If there’s ever a time to attempt a merger like this one though, it’s now. The competition watchdog has had its wings clipped by ministers, and may be wary of prohibiting altogether a merger of one barely profitable business (Hovis) with another loss-making one (Allied Bakeries). Instead, some form of structural or pricing remedies seem a likelier outcome, according to antitrust experts.
Under Endless’s stewardship, Hovis has proved it can be a sustainable business – whether this merger is more than a half-baked effort to stave off long-term category decline is another matter.