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Marks and Spencer a Casualty of Changing Market Conditions

Fri, 6th Sep 2019

Marks and Spencer has been relegated from the FTSE 100 after having spent 35 years in the top flight.

The company has seen its share price go through steep declines, while rivals have either died off, or been forced to evolve.

The changes to the FTSE 100 will come into effect as of Monday 23 September. It is possible that in the next quarterly reshuffle the company could return to the top flight. There are many companies that have managed to do so, however the relegation of the 35-year stalwart marks an end of an era for the company.

Marks & Spencer was one of just 28 companies to have survived in the top flight from the day the FTSE 100 opened. Many others that have fallen out of the index are still trading today, though. Current M&S Chairman Archie Norman was at the help of ITV when that company dropped out of the FTSE 100 and he maintains that the business was the same the next day. He believes that it is important that the management’s focus remains on the long term, rather than individual quarters. Leaving the index based on one quarterly reshuffle may be worthwhile if in the long term he is able to create value for the company.

Norman has a five-year plan for revamping the company, and he believes that the company has been in decline for a long time, and that it will take long, steady and calculated change to bring it back to relevance in a world of online retailers and out-of-town discounters.

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