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Short sellers bet £800m on M&S share price drop

Short selling of Marks & Spencer shares soared to a record high as hedge funds placed a collective £800m bet on a slump in share price following the shock profit warning from rival John Lewis last week. 

With almost 17% of M&S stock held on short-selling positions, it is second in the retail sector only to department store chain Debenhams, which currently has 18% of its stock held in shorts.

Short selling is the practice of borrowing shares of a company from an existing owner, selling those borrowed shares at the current market price and keeping the difference.

Figures from IHS Markit indicate almost 17% of M&S stock has been shorted against by public and private investors, of which 11.43% in publicly disclosed  investments such as those of investment manager Blackrock Institutional Trust Company, which is the latest company to update its position against M&S.

The shorting follows from profit warnings across the high street including John Lewis and Debenhams. Short sellers are targeting retail chains such as M&S, Next and Debenhams in the belief that share prices will fall.

M&S announced plans in May to close 100 stores by 2022

The high street retailer is currently reviewing its portfolio of in-house clothing brands, including Per Una, Autograph and Blue Harbour, in a bid to claw back dwindling fashion sales.

Currently ranked 98th in the FTSE 100 list of biggest British companies, a decline in M&S’s share price would leave the retailer at risk of demotion at the next quarterly review date in September.

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