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Morrisons rebounds into FTSE 100 as Sports Direct gets the boot

Paloma Kubiak
Written By:
Paloma Kubiak
Posted:
Updated:
03/03/2016

Morrisons has rebounded into the FTSE 100 following its demotion just three months ago, while Sports Direct has been booted out of the top index.

In the latest quarterly reshuffle of the largest companies listed on the London Stock Exchange, supermarket Morrisons has been promoted to the FTSE 100, following its drop in December which ended its 14-year stay on the index.

According to the supermarket’s January trading statement, it had a good Christmas trading period which signalled that shoppers are returning to the market.

“The distribution deal announced with Amazon this week is a real coup, while the recent rumours that Morrisons could be the subject of a takeover bid has fuelled interest in the company,” said Helal Miah, investment research analyst at The Share Centre.

However, Miah cautions that it’s still in the “early stages of a recovery strategy” led by new CEO David Potts and it prefers Sainsbury’s for investors interested in the sector.

Sports Direct has suffered a series of setbacks meaning analysts have expected it to be relegated from the FTSE 100.

The unseasonably warm weather and poor Christmas sales led to it issuing a profit warning at the start of the year, while media reports focusing on worker conditions haven’t helped the retailer either.

However The Share Centre recommends Sports Direct as a ‘buy’ for investors, although it warns that it is a “higher risk” following recent events.

Other casualties of the reshuffle include Aberdeen Asset Management, Hikma Pharmaceuticals and Smiths Group, while the recently merged Paddy Power Betfair, and Mediclinic International have climbed the ranks to leave the FTSE 250 and be promoted into the FTSE 100.