M&S food sales growth accelerates as cyber hack impact fades, NielsenIQ data shows

Marks & Spencer (M&S) reported a significant acceleration in food sales growth, up 6.7% year-on-year for the 12 weeks to August 9, with market share holding steady at 3.7%, according to NielsenIQ data. This robust performance indicates the fading impact of the April cyberattack, which previously led to an estimated £300 million loss in operating profit and disrupted online services now largely restored. The strong rebound in the food segment signals operational recovery and positive momentum for the retailer.

Analysis

Marks & Spencer (MKS.L) demonstrated a significant operational recovery, with year-on-year food sales growth accelerating to 6.7% in the 12 weeks to August 9, a marked improvement from the 4.3% reported in the prior period. This rebound, captured by NielsenIQ data, signals that the negative effects of the April cyberattack are receding. The company's ability to hold its grocery market share steady at 3.7% during this challenging period underscores the resilience of its food business. The context for this recovery is the severe disruption caused by the hack, which was projected to cost approximately £300 million in lost operating profit and led to a 46-day suspension of online clothing orders and a near four-month hiatus for click-and-collect services. The restoration of these key services in June and August, respectively, appears directly correlated with the improved sales performance. This recovery occurs within a robust grocery sector, where competitors like Tesco and Sainsbury's are also reporting strong results, indicating M&S is successfully navigating both its internal challenges and a competitive market environment.

Key Decisions for Investors

• Investors should view the 6.7% food sales growth as a strong positive indicator that the operational and financial impact of the cyberattack is diminishing, potentially signaling that the worst of the disruption is priced in.
• It is crucial to monitor upcoming company reports for confirmation that this sales momentum is sustainable and to gain clarity on the timeline for recovering the estimated £300 million in lost operating profit.
• Given the robust performance of competitors like Tesco and Sainsbury's, M&S's ability to maintain its market share is a key metric to watch, particularly now that its online and click-and-collect channels are fully operational again.