M&S fighting for its Footsie future

High St chain at risk of exit from blue chip index

MARKS & Spencer could be booted out of the FTSE 100 in a major blow to the 135-year-old High Street stalwart.

The retailer has been a member of the blue chip index since it was formed

more than 30 years ago, but it now faces relegation into the FTSE 250 in the next stock market reshuffle in June.

The M&S share price has more than halved in the past four years, leaving it valued at £4.4bn. That makes it one of the least valuable firms in the FTSE 100 – along with Direct Line, Hikma Pharmaceuticals and Easyjet.

The plunge in M&S’s value comes amid a crisis on the High Street that has seen thousands of stores closed and jobs lost as shoppers flock online. M&S itself is axing 100 stores by 2022. It shut seven on Saturday last week, bringing total closures so far to 47 as chairman Archie Norman and chief executive Steve Rowe battle to revive its ailing fortunes.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: ‘M&S is teetering on the brink of relegation from the FTSE 100 in the next reshuffle in June.

‘While demotion itself won’t have a significant financial effect on the share price, it would be a hugely symbolic moment which epitomises the decline of High Street retailing, and a body blow to Steve Rowe and Archie Norman who are pulling out all the stops to get the department store back on track.’

M&S shares peaked at around 740p in May 2007, when the company was valued at £12bn. It boasted profits of £1bn a year ago, but its latest annual results saw them fall to just £66.8m.

Sales in its fashion division have long been a problem, and the company has recruited TV presenter Holly Willoughby ( pictured) in a bid to boost business. M&S’s food business, which has been the jewel in its crown, has also struggled in recent years as shoppers are lured by bargains at German rivals Aldi and Lidl.

M&S suffered a dismal Christmas, with food, clothing and homeware sales all falling. The company has now slashed prices on almost 500 of its most popular food items in a bid to win back customers.

The wide-ranging reductions are part of a drastic overhaul of the food division. Earlier this year it struck a £1.5bn deal with Ocado to launch an online grocery delivery service for the first time, and the retailer is planning to open larger M&S Food supermarkets to attract more families.

Critics believe it is paying too much for the tie-up, which spells the end for Ocado’s 19-year partnership with Waitrose. Some Ocado customers have already threatened to leave, complaining that M&S is more expensive than Waitrose.

Norman brought in former protege Stuart Machin last year to revive the food business. The pair worked together at Asda and Australian supermarket Target, where Norman is still chairman.

In an effort to make M&S more accessible, Machin has plastered food prices adverts for the first time and struck a sponsorship deal with Britain’s Got Talent.

He recently revived its famous ‘This is not just food, this is M&S Food’ advertising campaign, 15 years after it was first launched.

And he has also increased portion sizes, bringing in family-size shepherd’s pies and pizzas.