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Marks & Spencer is to be relegated from the FTSE 100 in the next index shuffle. The storied British retailer has been benchmark constituent for 35 years and its departure highlights the challenges facing UK retailers.

M&S shares are off some 20% this year following the announcement of a potentially transformative deal with Ocado which required both a rights issue and a dividend cut. At the start of this week its market cap was a meagre £3.7bn (down from c£18bn in 1997).

The index changes take effect from 23 September when M&S will be joined in the FTSE 250 by Micro Focus, following a c30% decline in software company’s shares last week, and the insurer Direct Line. They will be replaced by the gold miner Polymetal, Hikma Pharmaceuticals and Meggit, the aerospace engineer.