Marks & Spencer (M&S) is set to make a triumphant return to the UK’s premier stock market index of leading blue-chip companies, four years after it was downgraded. This follows a substantial surge in the share price of the well-known high street retailer, as reported by Andrew Michael.
FTSE Russell, the global stock index provider, confirmed the news recently that M&S would be one of the four companies promoted to the FTSE 100 index as part of the compiler’s latest quarterly review. This move comes as a result of adjustments in index constituents, taking into account their market capitalization.
In addition to M&S, the list of promoted companies includes Dechra Pharmaceuticals, Hikma Pharmaceuticals, and technical products supplier Diploma. As part of this rebalancing act, four companies will be leaving the FTSE 100 to join the second-tier FTSE 250 index. These companies are house builder Persimmon, fund management firm Abrdn, insurer Hiscox, and chemicals company Johnson Matthey.
The changes will officially take effect after the stock market closes on Friday, September 15th. Subsequently, passive investment funds that track the performance of the FTSE 100, often referred to as the ‘Footsie,’ will divest their holdings in the shares of the relegated companies and restructure their portfolios to include the new additions when trading resumes on Monday, September 18th.
M&S, originally removed from the FTSE 100 in September 2019, is experiencing a resurgence following a recent overhaul of the company. While the traditional strength of its food business has played a significant role, there have also been positive indicators for its revamped clothing and home division.
Victoria Scholar, head of investment at interactive investor, commented on this resurgence: “Despite the cost-of-living crisis with consumers feeling the squeeze, M&S has been the star performer across UK retail this year, outshining rivals with a stellar share price gain of over 75% so far in 2023, compared to Next, for example, which is up around 17%. The company has successfully embarked on a considerable turnaround under the leadership of Stuart Machin, involving revamping its store estate and investing in technology and e-commerce.”
M&S’s return to the FTSE 100 stands in stark contrast to the fate of property firm Persimmon, which is exiting the index after a decade. Previously relegated from the Footsie during the financial crisis in 2008, Persimmon made a comeback in 2013. However, the company has faced difficulties of late.
Richard Hunter, head of markets at interactive investor, noted the challenges in the housebuilding sector, saying, “The housebuilding sector as a whole is currently on shaky foundations, with Persimmon’s particular exposure to first-time buyers an additional strain. The company’s shares have fallen by 19% in 2023, by 39% over the past year, and by 70% from the pre-pandemic peak of £32.30 it achieved in February 2020.”