M&S set for FTSE 100 return but builder Persimmon heading for exit

Marks & Spencer looks set to return to the FTSE 100 after a four-year absence as its turnaround gathers pace.

The High Street stalwart is on course to be one of four companies promoted to the blue-chip benchmark in next month’s quarterly reshuffle, according to an update from index compiler FTSE Russell last night.

Going in the opposite direction could be housebuilder Persimmon, which faces relegation to the FTSE 250 as the property market is battered by rising interest rates.

Rosy future? Actress Rosie HuntingtonWhiteley models for M&S

Others in line for promotion to the FTSE 100 are Dechra Pharmaceuticals, Diploma and Hikma Pharmaceuticals while Abrdn, Johnson Matthey and RS Group are set for demotion alongside Persimmon.

FTSE Russell noted these changes were merely ‘indicative’ and the final decision will be made based on the company values at the close of business on August 29. The changes will take place on September 18.

‘These are moving all of the time, so nothing is set in stone,’ Russ Mould, investment director at AJ Bell, told Bloomberg.

M&S was a founder member of the FTSE 100 in 1984 and a return – four years after it was relegated in September 2019 – would be a major boost for chairman Archie Norman and chief executives Stuart Machin and Katie Bickerstaffe as they seek to revive its fortunes.

M&S shares are up nearly 80 per cent so far this year, making it one of the best performing stocks in the FTSE 250, to leave it valued at £4.3billion.

In an unscheduled update earlier this month, it raised its profits forecasts for the year after seeing an 11 per cent jump in food sales and more than 6 per cent increase at its clothing and home division.

That triggered a flurry of upgrades from City analysts as observers declared M&S has got its mojo back.

By contrast, Persimmon shares are down nearly 20 per cent this year and almost 70 per cent since 2021 as rising interest rates slam the brakes on the housing market. Persimmon is valued at £3.2billion having been worth more than £10billion just over two years ago.

The company this month revealed it sold 4,249 newly built homes in the first six months of the year – down from 6,652 in the same period last year.

Smaller rival Crest Nicholson underlined the woes facing the sector this week.

The company slashed its profit forecasts for the year – further denting share prices across the industry.

Now Morrisons is overtaken by Lidl

Lidl and Aldi have both overtaken Morrisons in the wake of its private equity takeover.

Lidl has an 8.7 per cent share of the market with Morrisons on 8.1 per cent. Aldi controls 11.5 per cent of spending in the supermarket sector after overtaking Morrisons last year.

Morrisons – for years part of the big four with Tesco, Sainsbury’s and Asda – is the UK’s sixth biggest supermarket, according to the figures from data firm Nielsen. Morrisons saw weaker growth than all its rivals in the 12 weeks to August 12, with sales up just 1.7 per cent.

Discounters Aldi and Lidl continue to reap the rewards of shoppers looking to trim their grocery bills amid stubborn inflation.

Morrisons’ ‘perennial problem’ has been its lack of convenience stores compared to rivals like Tesco, according to Jonathan De Mello, founder of consultancy JDM Retail.

The supermarket’s New York-based private equity owners, Clayton, Dubilier & Rice, have also loaded the firm with ‘significant levels of debt’, constraining its ability to invest. De Mello said: ‘Calling them a retailer in trouble may be a bit strong but they are between a rock and a hard place.’

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