Morrisons is braced for demotion from the FTSE 100 as it continues to suffer from a supermarket price war.
The Bradford-based chain is expected to slip from the list of the UK’s biggest companies in the latest quarterly review after an 11% slump in its share price over the past month alone, taking it close to a five-year low.
The London Stock Exchange Group said Morrisons was likely to move into the FTSE 250 alongside the security group G4S and the engineering group Meggitt. They are expected to make room for Provident Financial, the doorstep lender, DCC, the Irish support services company, and the newly listed Worldpay, a payment processor.
A final decision will not be made until Wednesday afternoon but that will be based on market data from Tuesday night – which put Morrisons out of the FTSE 100 according to analysis by the Guardian. Its closest rival Randgold Resources is likely to cling on to its position as its market value stands at £3.76bn compared with Morrisons’ £3.56bn.
The move is likely to prompt share sales by tracker funds which only follow the UK’s biggest companies.
It comes after a difficult year for Morrisons as it struggled to fend off heavy competition from the discounters Aldi and Lidl and price cutting by bigger rivals Asda, Sainsbury’s and Tesco.
Morrisons shares took a hit last month after it revealed a 2.6% drop in sales, excluding fuel, at established stores in the three months to 1 November, compared with a 2.4% drop in the previous three months.
Its chief executive, David Potts, said he expected a better Christmas than last year, when underlying sales fell short of its rivals, with a fall of 3.1%, leading to the exit of Potts’ predecessor, Dalton Philips. “Our internal forecasts are promising something better, but in retail you have to go out there and do the job,” Potts said.
The shares slid further after analysts at Deutsche Bank downgraded Morrisons shares from a hold to a sell saying there was little reason to expect industry margins to recover as price cuts continue, in order to match the discounters.
