M&S boss sends dire warning to Rachel Reeves after closure announcement | UK | News
Marks and Spencer’s boss has warned that customers are “preparing for the worst” after Chancellor Rachel Reeves‘s “presentation of nothing” speech on Tuesday, adding that customers are now even more worried about tax hikes.
The chief executive, who revealed he had a “frank” conversation with Ms Reeves during a store visit last month, said the evidence from customer surveys it conducts suggested “they are getting worried about rising costs and they got more worried after yesterday’s speech”. They are very worried about tax rises and they think things are heading in the wrong direction.” He added: “They are planning for the worst and hoping for the best”.
Mr Machin also said the group faced cost increases of more than £50 million from the National Insurance hike in April over its first half, but that he expects profits to be “at least in line with last year” in the final six months of its financial year as it ramps up its cost-cutting target to £600 million.
“The first half of this year was an extraordinary moment in time for M&S,” Mr Machin said. “However, the underlying strength of our business and robust financial foundations gave us the resilience to face the challenge and deal with it. We are now getting back on track.”
It comes as the retail giant’s profits have more than halved since it suffered a major cyberattack earlier this year. The hack saw online home and fashion sales plunge more than 40% when it was forced to halt website orders.
M&S reported its underlying pre-tax profits tumbled 55.4% to £184.1 million in the six months to September 27. On a reported basis, profits were almost wiped out, plunging to £3.4 million from £391.9 million the previous year.
M&S said the hack cost it £324 million in lost sales – slightly more than its earlier estimate of £300 million – but it was able to recover £100 million in its first half through an insurance payout.
The attack is expected to impact profits by around £136 million, including approximately £34 million in the final six months of its financial year, M&S said. The group reported that sales in its fashion arm declined by 16.4% as the cyberattack caused significant disruptions, with online sales down 42.9% and store sales 3.4% lower.
The high street stalwart halted all online sales for around six weeks and experienced empty shelves due to disruptions to its logistics systems following a hacker attack targeting the business around the Easter weekend. Customer personal data – which could have included names, email addresses, postal addresses and dates of birth – was also taken by hackers.
The high street giant recently announced the closure of 11 of its cafes as part of a store restructuring. The retailer has more than 300 food shops across the country, and many of these shops feature cafes.
Some of the affected locations include Anlaby, Hull, and Martlesham Heath, Ipswich. M&S also recently closed its Wolverhampton city centre store on Dudley Street on September 27. The iconic store opened in 1929.
