What does the 7% decline in the price of MandS shares following the cyberattack mean for investors?

Over the past week, the consequences of Marks & Spencer's cyberattack have caused the company's market value to drop by about £700 million

This cyberattack isn't your typical one. For one of the most well-known stocks in Britain, this cyberattack has caused significant share price losses and more than a week of disruption.

In the seven days leading up to April 29, shares of Marks & Spencer (M&S) fell 60.9 percent, wiping out about 700 million dollars from the company's market value as investors assess the effects of lost sales and reputational harm.

Although it has not been confirmed who carried out the cyberattack, reports indicate that it may have been connected to the hacker collective Scattered Spider. American and British teenagers are believed to be part of the group.

The effects on Marks & Spencer's business operations have been profound. In-store contactless payments were momentarily disabled, and click-and-collect and online ordering are still not available.

After the retailer was forced to take some of its food-related systems offline, there have also been reports of empty shelves in certain food stores.

The management team of the company, which has worked extremely hard to turn M&S around in recent years, will be disappointed.

Following a period of poor sales, the retailer was demoted from the FTSE 100 in 2019, but in 2023 it was back in the UK's main stock market index. Since late 2022, the price of its shares has more than quadrupled as of this writing.

"The recent success of Marks and Spencer can be attributed in part to its effective management of its multi-channel operations, with click and collect services being especially well-liked," stated Susannah Streeter, head of money and markets at Hargreaves Lansdown.

This will further compound the bitterness of the recent cyberattack. In order to concentrate on smaller food stores where customers can pick up "click and collect" orders, the company has been closing a lot of stores in recent years. This model has been completely upended by the cyberattack.

Furthermore, the timing couldn't have been worse. According to Streeter, "since the attack occurred during a period of warm weather when summer ranges would typically be piling up in virtual baskets," fashion sales are likely to suffer greatly.

Beginning over the Easter weekend, the disturbance now poses a risk of continuing into the early May bank holiday. Customers typically use both times to shop or load up their online carts with new clothing for the upcoming warmer months.

What are the implications of the M&S cyberattack for investors?

JD Sports is one retailer that has previously experienced cyberattacks; in 2023, 10 million customer records were compromised. However, the nature of this attack differed from that which affected M&S. Even though data leaks can seriously harm a company's reputation, operations continued as usual.

In November 2024, a ransomware attack on supply-chain software provider Blue Yonder disrupted operations for a number of retailers, including Morrisons and Sainsbury's, who rely on the software for inventory control and logistics.

In comparison, the M&S incident is much larger. The fact that online orders have been totally stopped is among the most detrimental features.

According to the Telegraph, M&S receives over three million online orders each month, with 2.2 million of those orders being click-and-collect. Nicholas Found, an expert from Retail Economics, told the newspaper that the company was probably losing "seven figures per day" as a result of the disruption.

In addition to the immediate consequences, investors will want to know how M&S is safeguarding itself against future occurrences of this kind.

"Although other retailers have also experienced IT breaches, the extent of Marks and Spencer's difficulties in resolving the issue is concerning, and it might take some time to win back more cautious customers," Streeter stated.

In spite of this, despite the continuous disruption, the share price has recently begun to recover some of its losses over the previous two days. There was a 1 percent increase in the stock between Monday's market opening and Wednesday's market closing.

"This indicates that investors are "confident M&S can sort out disruption to its systems and that too much bad news has been priced into the stock," according to AJ Bell investment director Russ Mould.

Before turning online platforms back on, he said, "management is being extremely thorough behind the scenes to ensure everything is secure." This is indicated by the fact that the disruption has not yet been resolved.