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Marks & Spencer share price: Retailer expected to post annual profit drop

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Marks & Spencer Group (LON:MKS) is expected to post a drop in full-year profits when it updates investors on its annual performance next week. The blue-chip retailer, which has been undergoing a shake-up under chief executive Steve Rowe, is further seen as facing the threat of being demoted from the FTSE 100 index.

Marks & Spencer’s share price has fallen deep into the red in London in today’s session, having given up 1.92 percent to 291.60p as of 13:28 BST. The stock is underperforming the broader UK market, with the FTSE 100 currently standing 0.26 percent lower as 7,767.51 points. The group’s shares have given up just under 24 percent of their value over the past year, as compared with an over four-percent gain in the Footsie.

M&S to post results

M&S is scheduled to update investors on its full-year performance on Wednesday and Reuters reports that analysts’ average forecast for pretax profit for the 2017-18 year stands at £573 million, down from £614 million in the prior-year period.  Clothing and home like-for-like sales are forecast to have dropped 1.1 percent, with food down 0.2 percent.

Proactive Investors meanwhile reports that Credit Suisse expects a 4.5-percent dip in pretax profit to £539 million, with 0.4-percent drop in like-for-like sales in clothing and a 0.5-percent gain in like-for-like sales in food over the whole year.

FTSE 100 demotion threat

Reuters notes that the blue-chip retailer is also in danger of being demoted from the blue-chip FTSE 100 index, whose member the 134-year-old M&S has been since its inception in 1984. Thomson Reuters data ranks M&S at 102nd by market value in the FTSE 350 of large and mid-cap companies based on  yesterday’s closing prices. The newswire notes that companies are only demoted when they drop below 110 in the ranking, meaning that the blue-chip retailer will be automatically relegated if it drops nine more places. The next index reshuffle will be announced on May 30, using closing prices from the previous day, and will take effect on June 18.

As of 14:02 BST, Friday, 18 May, Marks and Spencer Group Plc share price is 290.70p.

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