Marks & Spencer

Ticker MKS

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As of 21:03 19 Jun 2019
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3,446.73 million
As of 21:04 19 Jun 2019

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M&S to avoid demotion from the FTSE 100

M&S store
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Retail giant Marks & Spencer is perilously close to being booted out of the FTSE 100 this week for the first time since the index was launched in 1984.

Its shares have tumbled by nearly a fifth over the past six months as sales and profits have come under pressure.

But it is likely to be saved from an embarrassing demotion from Britain's blue chip share index in this week's FTSE reshuffle thanks to its £601m investor cash call.

Instead budget airline Easyjet could face the chop after six years in the index, analysts reckon.

FTSE futures

M&S shopfront
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M&S - teetering on the edge of the FTSE100

The next reshuffle in the FTSE 100 is expected on 5 June and speculation is growing about who will be in and who will be out. The most poignant exodus may be Marks & Spencer, an original member of the index (created in 1984). It reported a 10% decline in full-year profits last week and the shares are down 19% this year.

Or maybe not. It has also launched a £600m rights issue to fund its joint venture with Ocado. The new capital won't actually be in the company's bank account until after the reshuffle but it's thought the idea that "the cheque is in the post" may be enough to satisfy the London Stock Exchange that it is still worthy of a place in the FTSE 100.

Instead there is speculation we may see easyJet bowing out. It's been a FTSE 100 member for eight years but the shares are down 47% over the last year because of lower margins and Brexit fears.

Who might be the new members? Richard Hunter, Head of Markets at Interactive Investor is tipping software and engineering firm AVEVA ("a company on a roll") and JD Sports (shares up 63% in the last year).

M&S leads FTSE fallers

M&S trollies
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Marks & Spencer led the FTSE 100 fallers on Wednesday, down 4.99% at 237.9p, followed by British American Tobacco, off £27.72.

Mining firms are topping the risers, with precious metals group Fresnillo up 1.38% at 748.7p.

Evraz is up 1% at 593.9p.

Overall, the FTSE 100 is down 0.82% at 7,209.52.

No bonuses at M&S

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Marks & Spencer has also just published its annual report.

It shows that there were no annual bonuses for is boardroom executives, including chief executive Steve Rowe. They did not get annual bonuses last year, according to the annual report.

Mr Rowe's total package still rose to £1.7m from £1.1m because a long-term incentive deal paid out.

The pre-tax profit was £523.2m and the annual report says this is "below the threshold set to trigger payments under either the corporate element or the individual element of the [bonus] scheme. Therefore, no bonuses under the 2018/19 annual bonus scheme will be paid to anyone in the organisation, including executive directors."

The retailer also published the ratio of its chief executive to the full-time equivalent total pay of those colleagues whose pay is ranked at the 25th percentile. medium and 75th percentile in the UK workforce. This showed a ratio of 92 to 1, 88 to 1 and 79 to 1 respectively.

M&S 'constrained by pace of change'

M&S store
Getty Images

Marks & Spencer chief executive Steve Rowe said the business was "constrained" by the pace of change in the year ended 30 March, as the retailer reported like-for-like sales falling in clothing and food.

"Whilst there are green shoots, we have not been consistent in our delivery in a number of areas of the business," Mr Rowe said.

"M&S is changing faster than at any time in my career - substantial changes across the business to our processes, ranges and operations and this has constrained this year's performance, particularly in Clothing & Home.

"However, we remain on track with our transformation and are now well on the road to making M&S special again."

Profit before tax and adjusting items was £523m, down from £581m the previous year.

The BBC visits at an M&S store that is closing and another that is seen as the future.
The BBC visits an M&S store that is closing and another that is seen as the future.