British food and fashion retailer Marks and Spencer (LSE:MKS) experienced a major cyberattack recently. As a result, it’s been forced to pause online orders. Could this incident send the Marks and Spencer share price down significantly from here? Let’s take a look at what’s going on.
Awful timing
It was only last week that I was talking up M&S shares. On Friday (25 April), I said that I saw a fair bit of appeal in them due to the company’s strong offering (high-quality food and in-demand fashion ranges) plus reasonable valuation.
Obviously, the timing of that call wasn’t great. The same day, the company announced that it was pausing online orders due to a cyber incident that had been going on for a few days, and this has put pressure on its share price.
Stock-specific risks
This highlights the risks of investing in individual stocks. No matter how great you think a company is, things can – and do – go wrong. So it’s important to be diversified. Owning a bunch of different stocks can reduce stock-specific risks like this.
What’s going on?
What amazes me is that nearly a week after online orders were paused, they’re still on hold and we don’t have a full understanding of what’s going on here.
There’s speculation that the company has been hit by a ransomware attack from a group named ‘Scattered Spider’. But we don’t know for sure as the retailer hasn’t said much.
It must be experiencing major technology challenges as a result of the attack however. Dan Card, a cyber expert at BCS, the Chartered Institute for IT, says that recovering from these kinds of attacks is often both technically and logistically challenging.
“I describe these as like a digital bomb has gone off,” he told the BBC. “The victim organisation is likely going to be working around the clock to respond and recover,” he added.
The importance of cybersecurity
It’s worth noting that this issue shows the importance of cybersecurity today. In today’s digital world, companies need to have the best possible protection.
This is why I’ve been investing in cybersecurity business CrowdStrike recently. I see significantly long-term growth potential in today’s digital world.
The potential impact on profits
As for the effect this issue will have on Marks and Spencer’s profits and share price, it’s hard to know. It really depends on how long it goes on.
In the company’s interim results, it said that 33% of Clothing & Home orders were made online. That’s not an insignificant proportion of orders.
If the company can get a handle on this issue and resume online orders, it may not face too much of an impact. However, if this drags on for weeks or months, we could be looking at a drop in FY2026 earnings forecasts and a lower share price.
Worth buying?
Do I still believe the stock is worth considering today? I do. But given the uncertainty arising from this incident, I wouldn’t go ‘all-in’ on it today.
If an investor’s looking to buy, I’d suggest averaging in to the stock to manage risk.
