In a rare bit of positive news for the retail sector, discounter B&M European Value Retail (BME) has been promoted to the FTSE 100 index in the latest quarterly reshuffle, global index provider FTSE Russell has confirmed.
In a rebalance that sees just one change to the FTSE 100, broadcaster ITV (ITV) suffered relegation to the FTSE 250, losing its place in the elite index after a spell dating back to March 2011.
FTSE Russell’s rules-driven and impartial quarterly reviews ensure that the indices continue to accurately portray the market they represent and the changes from the latest quarterly reshuffle take effect from 21 September 2020.
BOOM TIME FOR B&M
Discount variety retailer B&M is in something of a sweet spot in this Covid-19 pandemic.
Its value proposition is ideally suited to the current environment - value-oriented and generally situated in larger, out-of-town sites where it is easier for shoppers to socially distance - and its market capitalisation has swelled to £4.75 billion thanks to strong UK trading throughout the lockdown.
Promotion to the FTSE 100 for the first time comes just over six years after the company’s flotation at 270p a share. The fact that a discount variety retailer has made it into the stock market top flight highlights the continuing structural changes in the retail sector.
Shore Capital’s retail analysts commented: ‘We applaud B&M’s management team, in particular Simon Arora - chief executive and Paul McDonald - chief financial officer, who have steered the company since IPO back in 2014 and created a FTSE 100 company.
‘Given the retail backdrop in 2020 and the difficulties facing the sector, a relatively rare piece of good news for the wider retail sector,’ they continued.
SECOND DEMOTION FOR ITV
This is broadcaster ITV’s second demotion since the company’s creation in its current form in 2004, when Granada took over Carlton Communications.
Shares in ITV have weakened during 2020 with the pandemic limiting the group’s ability to create and show new content and attract advertising and ITV also facing competition from streaming services and rival broadcast technologies. First-half figures made for grim reading, as broadcast revenues fell 21% and the interim dividend was cancelled.
ITV’s entry was among ten changes to the FTSE 250 announced by London Stock Exchange (LSE) owned FTSE Russell, including promotions for Mr Kipling cakes-to-Bisto gravy maker Premier Foods (PFD) and the Baillie Gifford US Growth Trust (USA).
ON THE SUBS BENCH
Investors should also note that FTSE Russell operates a reserve list for the FTSE 100, to be used in the event of corporate actions taking place in between reviews, such as a takeover of a FTSE 100 giant, or a delisting or suspension.
In such cases, the reserve list constituent with the biggest market capitalisation (on the date of the corporate action) would replace the outgoing constituent.
Limbering up on the substitutes bench are the likes of Pershing Square Holdings (PSH), the Bill Ackman-led investment vehicle, student accommodation investor Unite (UTG) and precision engineering firm Renishaw (RSW), not to mention former FTSE 100 members Convatec (CTEC), Direct Line (DLG) and F&C Investment Trust (FCIT).
