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Marks & Spencer, at risk of being demoted from FTSE 100 if shares keep losing value

By Angela Gonzalez-Rodriguez


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Business |ANALYSIS

The beloved British retailer might be falling off the FTSE 100, as a result of a sustained loss of market value. Marks & Spencer is facing the risk of demotion from the UK’s largest stocks benchmark index for the first time since the index was formed over 30 years ago.

M&S shares have fallen in value by more than a fifth over the past year, leaving the company in danger of dropping into the FTSE 250 mid-cap index in the next stock exchange reshuffle, warns market sources quoted by ‘The Guardian’.

M&S at risk of dropping from the FTSE 100 due to sustained share devaluation

The 134-year-old M&S has been a member of the blue-chip index since its creation in 1984 and dropping off of it to join the mid-cap stocks index, the FTSE 250, will be seen as the definitive sign of the retailer falling out of fashion both in the high street and the City.

According to Thomson Reuters’ data, M&S currently ranks 102nd by market value in the FTSE 350 of large and mid-cap companies based on last week’s closing prices. In order to avoid constant changes to the index following day-to-day price volatility, companies are only demoted when they drop below 110 in the ranking.

In other words, if M&S descents nine more positions, it will be automatically relegated when FTSE Russell reconstitutes the index in its quarterly reshuffle. It’s worth recalling that the next reshuffle will be announced on May 30, using closing prices from the previous day, and will take effect on June 18.

On Wednesday May, 23 M&S announces its full-year results, results that the market expects to remain weak. City analysts are forecasting a second consecutive decline in annual profits.

Analysts' average forecast for pretax profit for the 2017-18 year is 573 million pounds, down from 614 million pounds in 2016-17, reports the ‘Independent’. Clothing and home like-for-like sales are forecast to also come in lower, dropping 1.1 percent.

Image:Marks & Spencer website

Marks & Spencer