Major UK retailer set for return to London’s FTSE 100 as sales rise

The chain has seen its shares jump by more than two thirds over the past year, with sales rising steadily despite a difficult retail backdrop.

Holly Williams
Wednesday 30 August 2023 13:41 BST
File photo dated 07/11/21 of a Marks and Spencer store on Oxford Street in London. High street giant Marks & Spencer is set to return to the blue chip share index on Wednesday after a four-year hiatus after a surge in shares on the back of resurgent sales.
File photo dated 07/11/21 of a Marks and Spencer store on Oxford Street in London. High street giant Marks & Spencer is set to return to the blue chip share index on Wednesday after a four-year hiatus after a surge in shares on the back of resurgent sales. (PA Wire)

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High street giant Marks & Spencer is set to return to London’s blue chip share index on Wednesday after a four-year hiatus following a jump in shares on the back of resurgent sales.

The retail chain is expected to be promoted back up to the top tier in the latest quarterly indices reshuffle, according to data from FTSE Russell.

It has languished in the FTSE 250 Index since being demoted from the top flight in 2019 for the first time, having been a founding member of the leading City share index.

The expected promotion comes as M&S has seen its shares jump by more than two thirds over the past year, with sales rising steadily in both its food halls and clothing and home division.

A promotion back into the top flight would be a coup for M&S chief executive Stuart Machin and co-chief executive Katie Bickerstaffe, the duo who are shaping up to be a dream team by reviving the company’s fortunes amid the challenging cost-of-living environment

Susannah Streeter, Hargreaves Lansdown

Earlier this month, M&S upped its results outlook for the half-year to September, having increased its market share in both trading businesses.

The company revealed an 11% sales rise in its food operation, while its clothing and home business saw sales grow by more than 6% in the past 19 weeks.

This is against a difficult wider backdrop in the retail sector as higher mortgage costs and household bills have put pressure on shoppers’ budgets.

M&S appears to be faring better than some of its retail rivals, with John Lewis Partnership battling to improve sales.

Susannah Streeter, an equity analyst at Hargreaves Lansdown, said: “The focus of the M&S brand on both quality and price has been a clear advantage and its stock selection has received the thumbs up from shoppers.

“Shrinking its estate, and closing larger stores in town centres, is a strategy bearing fruit with smaller shops in retail parks offering easy to use click and collect services.

“A promotion back into the top flight would be a coup for M&S chief executive Stuart Machin and co-chief executive Katie Bickerstaffe, the duo who are shaping up to be a dream team by reviving the company’s fortunes amid the challenging cost-of-living environment.

“But there are challenges ahead, with the longer-term outlook for retail hard to map.”

FTSE Russell said that based on indicative share prices from August 18, M&S is likely to be joined on the promotion list by technical products supplier Diploma and drug makers Hikma Pharmaceuticals and Dechra Pharmaceuticals.

Housebuilder Persimmon is among those set to suffer the reverse fate with a demotion to the second tier, alongside investment group Abrdn, catalytic converter maker Johnson Matthey and RS Group.

Charles Church builder Persimmon has seen its shares slide as gloom gathers over the housing market caused by soaring mortgage costs and sliding buyer demand.

“Nevertheless, the housing shortages in populous parts of the UK don’t look like being solved any time soon, which should give housebuilders like Persimmon more resilience for the longer term,” said Ms Streeter.

Firms predicted to move up to the FTSE 250 include William Hill gambling group 888 Holdings and greetings card firm Moonpig.

The results of the reshuffle will be announced on August 30, based on share prices as at the market close on August 29.

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