Marks & Spencer to escape FTSE 100 demotion, while JD Sports set to make its debut
High street giant Marks & Spencer looks set to narrowly avoid relegation from Britain’s blue chip share index in this week’s FTSE reshuffle, as JD Sports is set to make the cut for the first time.
Markets experts said M&S is perilously close to being booted out of the top tier for the first time since the FTSE 100 was launched in 1984 after its shares have tumbled by nearly a fifth over the past six months as sales and profits have come under pressure.
But it is likely to be saved from an embarrassing demotion thanks to its £601m investor cash call.
M&S is launching the rights issue to help pay for its joint venture with online grocer Ocado to boost its food offering and online delivery service.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “M&S now looks like it’s going to avoid relegation from the FTSE 100 by the skin of its teeth, and largely thanks to an extra £601m of capital raised through a rights issue.
“While the fresh capital won’t actually be available until after the FTSE reshuffle calculation, we expect the index provider to give M&S the nod, on the basis the money’s in the post.”
The quarterly reshuffle by the FTSE Russell, which is based on Tuesday’s closing share prices, is expected to see sportswear retailer JD Sports enjoy contrasting fortunes as it is forecast to make its debut in the blue chip index.
Its shares have surged as it has bucked the wider high street gloom with rising sales and profits.
For JD Sports, the promotion would cap a successful recent shares run for the chain and comes in stark contrast to the stock market fortunes of its main rival Sports Direct.
Sports Direct shares have had a difficult year, with the group and its controversial owner Mike Ashley rarely out of the headlines as his empire has sought to expand, snapping up the likes of House of Fraser and Evans Cycles.
JD Sports is likely to be joined on the list for promotion by Cambridge-headquartered software specialist Aveva, which recently sealed a deal to merge with France’s Schneider that effectively doubled the company’s size.
Airline easyJet looks almost certain to fall out of the list along with Just Eat, Hikma Pharmaceuticals and an “outside chance Sainsbury’s and ITV get involved in the dogfight”, according to experts.
The next set of stock promotions and relegations will be announced after the market closes on Wednesday, based on the previous night’s closing prices, and are set to take effect on 24 June.