ASOS could lose FTSE 250 place in latest reshuffle

(Sharecast News) - No changes are expected to the roster of blue chips on the FTSE 100 as part of index provider FTSE Russell's quarterly reshuffle of UK equity benchmarks, though fast fashion retailer ASOS is set to be kicked out of the FTSE 250. FTSE Russell, which rejigs the makeup of the main stock indices every quarter, will use valuations at the close of play on Friday to produce a list of indicative changes to the names on each list, with the final decision expected on 2 September.

Companies on the FTSE 100 will be considered for automatic demotion to the FTSE 250 if they are no longer within the top 110 largest names by market cap.

The smallest company on the list is housebuilder Taylor Wimpey following a 19% share-price slump this year, though its position at 107th suggests it may avoid being relegated, according to analysis by AJ Bell.

FTSE 250 constituents eligible for an automatic promotion on to the top-tier list need to be within the top 90 companies by market cap. Burberry and Spectris at 94th and 97th, respectively, are the highest valued FTSE 250 stocks, but are unlikely to step up unless they see dramatic shifts higher over the next week or so.

On the bottom end of the FTSE 350 list, ASOS, Polar Capital Global Financials Trust and Ocean Wilson Holdings may lose their positions to high-growth FTSE Small Cap stocks with all three now valued at under £365m. Small Cap names Oxford Biomedica and Pinewood Technologies are both currently valued at more than £600m.

A demotion for ASOS in particular would be the "latest blow to the company's reputation", according to AJ Bell investment analyst Dan Coatsworth.

"ASOS moved from AIM to the Main Market in February 2022 with the aim of enhancing its corporate profile and recognition, as well as attracting a broader group of institutional shareholders. At the time, it had an ambitious growth strategy and was determined to bounce back from a post-pandemic hangover which saw a big slowdown in sales growth across the retail sector," Coatsworth said.

"Unfortunately, its struggles have got worse and the shares have limped along. Competition has remained fierce, consumer trends have shifted, and ASOS has been left behind."