M&S' food sales growth slows again after cyberattack, says NielsenIQ

Marks & Spencer's (M&S) food sales growth slowed significantly to 4.3% year-on-year for the 12 weeks to July 12, down from 9.1% previously, according to NielsenIQ data. This deceleration is primarily attributed to the April cyberattack, which led to operational disruptions, reduced food availability, and increased waste and logistics costs, with M&S estimating a £300 million ($406 million) impact on operating profit. Despite the sales slowdown, the retailer's market share remained steady at 3.6%.

Analysis

Marks & Spencer (MKS.L) is facing significant operational and financial headwinds following an April cyberattack, evidenced by a sharp deceleration in its food sales growth. According to NielsenIQ data for the 12 weeks to July 12, year-on-year food sales growth slowed to 4.3%, a substantial drop from 9.1% in the prior reporting period and 10.8% before that. This slowdown is directly linked to the attack's disruption, which resulted in reduced food availability and increased waste and logistics costs. The financial damage is material, with management forecasting a £300 million impact on operating profit. While the retailer managed to maintain a stable market share of 3.6%, the ongoing suspension of its click-and-collect service signals that operational recovery is incomplete. This underperformance is company-specific, contrasting with the robust results reported by competitors like Tesco and Sainsbury's.

Key Decisions for Investors

• Investors should anticipate near-term pressure on M&S's profitability and stock performance, given the explicit £300 million profit warning and the material slowdown in a key growth division.
• Consider the relative strength of competitors such as Tesco (TSCO.L) and Sainsbury's (SBRY.L), which are performing well and could be beneficiaries of M&S's company-specific operational failures.
• Monitor upcoming sales data and the status of service restorations, as the ability to stabilize sales growth and fully restore services like click-and-collect will be a critical indicator of recovery versus a more prolonged period of underperformance.