Morrisons regains listing on exclusive FTSE 100

04-Mar-2016 - Last updated on 04-Mar-2016 at 11:13 GMT

Morrisons has regained a listing on the exclusive FTSE 100, helped by its fresh food manufacturing capacity

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Morrisons has regained its listing on the exclusive FTSE 100 group of companies, after a boost to its share price arising from improved trading and the announcement of its partnership with online retailer Amazon.

The influential list of top 100 companies is compiled every three months in accordance with companies’ share values. A business’ market worth is calculated by multiplying its number of shares by the rise or fall in their price. See box below for more about the index.

The retailer was downgraded to the FTSE 250 group of businesses three months ago, as its share price suffered from turmoil in the UK retail landscape.

Morrisons, alongside the other big four supermarkets – Tesco, Asda and Sainsbury – found its sales under severe pressure from the growing popularity of the hard discounters Lidl and Aldi.

After peaking at 208p a share in March 2015, following the appointment of David Potts as chief executive to replace Dalton Philips, the retailer’s share value slumped to 139p.

Partnership with Amazon

But improved trading figures, praise from City analysts – such as Shore Capital – and news of its recent partnership with Amazon has revived share prices.

Yesterday (March 3) Morrisons’ share price rose to 206.5p, nearly matching the peak performance of last year.

A year after Potts took the helm of the Bradford-based retailer, Shore Capital’s Clive Black and Darren Shirley concluded: “The journey has begun: “David Potts has moved mountains in just one year, to us.”

Supporting recent share price gains was the news of a partnership with Amazon. Following the deal, announced at the end of last month, the retailer’s products will become available for home delivery through the Amazon Prime Now service.

Amazon’s customers will be able to order Morrisons’ ambient, fresh and frozen grocery products through the Amazon Prime Now and Amazon Pantry services.

Manufacturing, distribution and wholesale capabilities

The partnership will help Morrisons grow volumes and leverage its manufacturing, distribution and wholesale capabilities, it was claimed.

A key part of the retailer’s recovery strategy has been to exploit its food manufacturing capacity to help drive down customer prices. Morrisons is the UK’s second largest manufacturer of fresh food.

Commenting on the Amazon partnership, Potts said the combination of Morrisons “unique strengths as a food maker” and fresh food expertise with Amazon’s online and logistics capabilities was compelling proposition.

“This is a low risk and capital light wholesale supply arrangement that demonstrates the opportunity we have to become a broader business,” said Potts.

Meanwhile, a Morrisons spokesman declined to comment on the FTSE 100 relisting.

What is the FTSE 100?

The FTSE 100 is an index composed of the 100 largest companies listed on the London Stock Exchange (LSE). These are often referred to as ‘blue chip’ companies, and the index is seen traditionally as a good indication of the performance of major companies listed in the UK. The FTSE 100 name originates from when it was owned 50/50 by Te Financial Times and the London Stock Exhange (hence FTSE - FT and SE) and the fact it contains 100 companies. The FTSE 100 is now maintained by the FTSE group which is a wholly owned subsidiary of the London Stock Exchange.