Marks & Spencer (M&S) reported a sharp jump in first-half profit, but the numbers tell two very different stories inside the UK retailer. Adjusted profit before tax more than doubled to £403.2 million for the six months to September 26, helped by a strong recovery in food sales. Yet the company is still dealing with the fallout from a cyberattack in April 2025, which has left its fashion division struggling with weaker margins.
Food leads the way
Total sales climbed 16.2% to £9.26 billion, with the food division doing much of the heavy lifting. Food sales rose 13.9%, as the company quickly regained momentum and continued to take market share from competitors. That performance helped cushion the impact of problems in the clothing side of the business.
The fashion, home and beauty (FH&B) division also saw sales growth of 17.5%, but analysts point out that spring and summer ranges were ordered while key systems were down. That made it harder to predict demand and restock popular items. When ordering and replenishment systems are offline, retailers often end up with the wrong sizes and styles in the wrong stores. The usual fix is to discount heavily to clear shelves, which can eat into profit even when revenue looks healthy.
The cyberattack's lingering effect
The April cyberattack disrupted M&S's operations at a critical time for planning its seasonal ranges. While the company has said systems are recovering, the impact on product mix and inventory is still showing up in the numbers. Analysts note that such disruption often leads to more clearance sales and markdowns in the following months, as the retailer tries to correct its product assortment.
M&S kept its full-year profit outlook “in line with market expectations,” with analysts previously forecasting around £941 million. The company said it expects a stronger second half as availability normalizes. That suggests management believes the worst of the disruption is behind it, but investors will be watching closely to see if margins recover as promised.
What it means for investors
For markets, M&S's profit target is turning into a margin test for its clothing business. Food can keep growing, but it's the FH&B division that can swing overall profits if markdowns creep higher. When ordering and replenishment systems go offline, retailers tend to end up with the wrong sizes and styles in the wrong places, then use discounts to clear shelves and restart the season with a cleaner mix.
If availability improves without a heavy round of price cuts, FH&B cash generation can rebound quickly. If not, profits may depend more on repairing gross margin than on keeping sales growth strong. In other words, the second half is less about whether people keep shopping at M&S, and more about whether the company can sell what it already has at healthier prices.
This dynamic is not unique to M&S. Other retailers have faced similar challenges after cyber incidents, and the pattern is often the same: sales recover first, but margins lag until inventory is cleaned up. Investors who follow the retail sector will be watching M&S's next update for signs that markdowns are easing and that the fashion division is returning to normal profitability.
For everyday investors, the key takeaway is that a company can report strong headline numbers while still facing underlying pressures. The cyberattack's effect on M&S's fashion business is a reminder that operational disruptions can have a delayed impact on financial performance. As always, it's important to look beyond the top-line growth and consider how sustainable the profit picture really is.
M&S's experience also highlights the importance of supply chain resilience. Companies that invest in robust systems and contingency plans may be better positioned to weather such shocks. For now, M&S is betting that its recovery plan will deliver a stronger second half, and investors will be eager to see if that bet pays off.
