Investors keep faith in M&S success story
There’s no doubt that M&S is in the grip of a crisis, but investors appear to have faith that the current cyber nightmare won’t undermine the dream run enjoyed by this retailer in recent years.
The business still stands out as a triumphant turnaround success story, with a share price that’s been on an upward trajectory since late 2022. The retailer remains one of the best performers in the FTSE100, even despite recent jitters caused by the probable ransomware attack on its systems. Towards the end of last year, the company hailed “the beginnings of a new M&S” as executives pointed to solid gains in market share and impressive sales driven by food, clothing and homeware.
Earlier this year, chairman Archie Norman insisted that while there had been “four years of decent results” there was still more work to do, telling the Guardian “We think keeping the spirit of the turnaround is essential because it takes a long time to irreversibly change a business.” Norman was referring to the detailed, patient work of overhauling product lines, revamping stores, gaining market share and earning customer loyalty. CEO Stuart Machin echoed the sentiment in January after unveiling bumper Christmas results, telling journalists “Transforming Marks and Spencer is a marathon, not a sprint, and we go into 2025 shifting up a gear and raring to go as we accelerate the scale and pace of change.”
Nobody should downplay the seriousness of the current cyber attack; the immediate implications are clear for brand reputation and there will be a considerable knock-on effect on stock, supply and operations. But it constitutes a painful interruption more than an existential threat. As top retail analyst Clive Black put it this week, “we expect and hope the current disruption to be a temporary matter, which we expect to involve insurance claims and modest net financial cost.” In the same note, Black pointed out that the retailer “has been flying” in terms of market share data and that while the cyber chaos is “frustrating” he expects “much learning and action to mean that [M&S] will be all the more resilient and effective” in the longer term.
While cyber experts work through the night to restore order, and police investigate the criminal assault on its networks, we shouldn’t lose sight of the impressive foundations on which this retailer now sits.