Frasers Group is on the brink of being removed from the FTSE 100 due to a significant drop in its share value.
- The retail giant has experienced a more than 10% decline in shares over three months, reducing its market cap to £3.3 billion.
- Frasers Group’s ongoing dispute with Boohoo Group has been a major factor in the decline of its shares.
- The company’s open letter urging Boohoo to replace its chair led to a 5% additional fall in share value.
- B&M, another retailer, is also facing FTSE 100 relegation following a similar drop in shares.
Frasers Group, a prominent name in the retail sector, is poised for a potential relegation from the FTSE 100 index. The company has seen its stock tumble over 10% in the last three months, bringing its market capitalisation down to £3.3 billion. This decline is expected to cause its move to the FTSE 250 next week, as indicated by the latest provisional changes to the index.
A significant aspect of this downturn is attributed to Frasers Group’s ongoing conflict with Boohoo Group. The tension between the two companies escalated when Frasers, holding a substantial 27% stake in Boohoo, publicly called for a change in Boohoo’s leadership. Their demand for chair Mahmud Kamani to step down, articulated in an open letter, saw an additional dip in Frasers’ stock by 5%.
This corporate discord seems to have reverberated through the market, unsettling investors and contributing to the declining stock performance. The demand for leadership change at Boohoo was framed within a statement from Frasers, declaring “the chaos at Boohoo must end”.
The scenario is not isolated to Frasers alone. B&M, another notable retailer, is also grappling with a slide in its market value and is projected to join Frasers in leaving the FTSE 100. B&M has witnessed a 21% decrease in its shares over the same timeframe, resulting in a market cap of £3.4 billion. The dip was partly fuelled by increased operational costs due to expansion and broader supply chain investments, particularly in France.
Investors are closely observing these developments, waiting to see how Frasers Group will manoeuvre through its current challenges and whether strategic changes will restore its FTSE 100 standing.
Frasers Group’s impending exit from the FTSE 100 highlights the profound impact of boardroom disputes on investor confidence and market stability.
