Marks & Spencer set for return to London’s FTSE 100 on back of resurgent sales

It has languished in the FTSE 250 Index since being demoted from the top flight in 2019 for the first time, having been a founding member of the leading City share index. The expected promotion comes as M&S has seen its shares jump by more than two thirds over the past year, with sales rising steadily in both its food halls and clothing and home division.

Earlier this month, M&S upped its results outlook for the half-year to September, having increased its market share in both trading businesses.

The company revealed an 11 per cent sales rise in its food operation, while its clothing and home business saw sales grow by more than 6 per cent in the past 19 weeks. This is against a difficult wider backdrop in the retail sector as higher mortgage costs and household bills have put pressure on shoppers’ budgets. M&S appears to be faring better than some of its retail rivals, with John Lewis Partnership battling to improve sales.

Susannah Streeter, an equity analyst at Hargreaves Lansdown, said: “The focus of the M&S brand on both quality and price has been a clear advantage and its stock selection has received the thumbs up from shoppers.

“Shrinking its estate, and closing larger stores in town centres, is a strategy bearing fruit with smaller shops in retail parks offering easy to use click and collect services.”

FTSE Russell said that based on indicative share prices from August 18, M&S is likely to be joined on the promotion list by technical products supplier Diploma and drug makers Hikma Pharmaceuticals and Dechra Pharmaceuticals. Housebuilder Persimmon is among those set to suffer the reverse fate with a demotion to the second tier, alongside investment group Abrdn, catalytic converter maker Johnson Matthey and RS Group. Charles Church builder Persimmon has seen its shares slide as gloom gathers over the housing market caused by soaring mortgage costs and sliding buyer demand.

“Nevertheless, the housing shortages in populous parts of the UK don’t look like being solved any time soon, which should give housebuilders like Persimmon more resilience for the longer term,” said Ms Streeter.