FTSE 100 reshuffle: It wasn’t so long ago ‘that M&S had SOS emblazoned across its brand’

FTSE Russell, the global index provider, confirms today that Dechra Pharmaceuticals, Diploma, Hikma Pharmaceuticals and Marks and Spencer Group will be joining the FTSE 100 Index as a result of the September 2023 quarterly review.

In the rebalance, Abrdn, Hiscox, Johnson Matthey and Persimmon will leave the FTSE 100 Index and enter the FTSE 250 Index.

The rules-driven, impartial quarterly reviews ensure the indexes continue to portray an accurate reflection of the market they represent and form an essential component to the management of the indexes.

John Choong, equity and markets analyst at investing comparison platform, InvestingReviews.co.uk, said, “It wasn’t so long ago that M&S had SOS emblazoned across its brand, but now it’s back in the big league.

“Marks and Spencer’s promotion to the FTSE 100 is a testament to the amazing work CEO Stuart Machin and his team have done since taking the reins of the renowned retailer. Since taking over as co-CEO with Katie Bickerstaffe in May 2022, M&S shares have rallied from 150p to 224p.

“The pair have transformed a dying retailer that lost its shimmer into a vibrant and exciting business with plenty of potential. Marks’s spark is back.

“Provided the premium retailer can achieve 1% market share growth every year, it’ll be on track now to overtake its closest competitor in John Lewis (Waitrose) by as soon as 2024 in the grocery sector.

“With shop price inflation continuing to moderate, wage growth now above inflation and the opening of new stores, Marks and Spencer looks set to be a FTSE 100 mainstay for the foreseeable future.

“Joining M&S is generics manufacturer Hikma. Spearheading its re-entry to Britain’s premier index is the group’s newly authorised generic, Xyrem, along with other generics gaining traction, too. This resulted in an impressive surge in generics revenue and core operating profit.

“On the other end, Persimmon’s demotion from the FTSE 100 is an unfortunate consequence of the weakness in the housing market along with the removal of the Government’s Help to Buy scheme, which had been its biggest catalyst over the past few years. Consequently, its market cap fell from its peak of £10.39bn in February 2020 to £3.39bn today as demand for its cheap houses fell exponentially.

“That said, Persimmon’s stay in the FTSE 250 may be shortlived if inflation and mortgage rates continue to moderate in the coming months. With a general election coming up, a relaxation of housebuilding rules and regulations could arguably see Britain’s largest house builder make a comeback sooner rather than later. Plus, housing affordability is beginning to return with real wages now above inflation, which could spur further demand.

“Joining Persimmon is investment management firm, abrdn. Given the economic environment, characterised by the cost-of-living crisis, rising interest rates and volatility in financial markets, customer outflows and a fall in assets under management have caused the stock to fall like a stone.

“Nonetheless, a return for abrdn to the UK’s main index in the near future can’t be ruled out either. An improving macroeconomic outlook and falling interest rates over the next year or two could push the shares back up as investor sentiment rebounds.