Marks and Spencer set to be ejected from FTSE 100 for first time in 35 years
Marks & Spencer is set to lose its place in the FTSE 100 list of the UK’s biggest companies tomorrow after 35 years, ending its long-held membership as one of 28 original firms.
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The troubled retailer will drop down to the FTSE 250 after suffering a sharp drop in its share price following several tough years of trading on the high street.
Household name Direct Line and software firm Micro Focus International also both dropped out of the FTSE 100. Hikma Pharmaceuticals, engineer Meggitt and metals miner Polymetal International were all promoted.
Indices firm FTSE Russell will confirm the list after the market closes tomorrow evening.
The end of M&S’s blue-chip status comes after a deterioration in the firm’s share price, which has plunged by more than half over the last five years, taking the firm’s value to £3.64bn as of Tuesday night.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “M&S has been bouncing around the drop zone for some time.”
He said the fall was reflective of “some pretty unpleasant trends in the wider retail sector”.
The British high street has struggled in recent years as online shopping has reduced footfall and a fall in sterling has made imports more expensive, among other issues.
Hyett said large business such as M&S have also struggled. “Although the food business has been doing very well recently, because you’ve got large existing legacy stores with general merchandise businesses in them that need filling… you have a lot of stock.”
“You can’t sell all that stock so you have to discount it, which hits margins. But also customers start to expect for you to offer those kind of discounted prices and no longer buy at the full price.”
Next, JD Sports, Kingfisher, which owns B&Q among others, and Primark owner Associated British Foods are the only general retailers left in the FTSE 100.
Emma-Lou Montgomery, associate director at Fidelity International said: “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.”
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“As the threat of a no-deal Brexit persists, investors are clearly becoming concerned about buying companies that are purely exposed to the UK.”