You are here: Home - Investing - Experienced Investor - News -

M&S to be relegated from FTSE100

Written by: Emma Lunn
Marks & Spencer will drop out of the FTSE 100 for the first time in the index's 35-year history.

High street stalwart M&S is expected to be expelled from the FTSE100 in the quarterly reshuffle of the London index. The prediction came after M&S shares closed at 187p on Tuesday, giving the retailer a market value of £3.64bn.

FTSE Russell, the index provider, will confirm M&S’s exit after the end of trading on Wednesday, with the change taking effect on 23 September.

Shares in M&S have slid 36 per cent over the past year as investors lost faith after a decade of failed reinventions and three years of profit falls. The firm’s relegation would mark the first time M&S has traded outside of the index of top 100 listed UK companies in the 35 years since it was launched.

Emma-Lou Montgomery, associate director at Fidelity International said: “While expected, this is a significant moment in the company’s history – and means the once-favoured retailer has fallen out of the index of leading shares for the very first time since it was created in 1984.

“This is a landmark moment for the British brand M&S in particular, marking an even broader shift in the FTSE 100 from a domestically UK focused market to an international one. As the threat of a ‘no deal’ Brexit persists investors are clearly becoming concerned about buying companies that are purely exposed to the UK.

“The stock story of Marks and Spencer is a good example of why a diversified investment strategy continues to be so important. M&S was considered a safe bet  –  a historic member of the FTSE 100 and a much-loved British retailer – yet the glory days seem to be coming to an end with the share price more than half what it was five years ago.”

Other stocks in the frame for relegation include Micro Focus, Direct Line and Centrica. Polymetal, Hikma and Meggitt are most likely to be promoted to the FTSE100.

Helal Miah, investment research analyst at The Share Centre, said: “It is interesting to see a clear distinction between those on the way up and those heading down and highly reflective of the current economic and political environment and the themes we have been highlighting in our quarterly Profit Watch UK report. On the way out is the more UK focussed businesses while those with a more global exposure look to replace them.

“Marks and Spencer for so long has been a candidate going down only to just escape at the last minute. The last time around it was saved by its well-timed rights issue, but alas, it can only hold out for so long and this time there seems little that can save it from going down bar a spectacular recovery in the share price by the end of the day.”

M&S has long suffered complaints by investors and customers that it has failed to revamp its clothing lines, and lacks appeal for the younger generations. In the past its foods division has helped offset the general merchandise division, but not so much anymore as growth opportunities from its smaller convenience food stores disappear and competition intensifies.

The group has also been too slow to adapt to online retailing and has been left behind by other retailers offering a more compelling online service.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week