Retailer is expected to be confirmed as the latest addition to the leading index on Wednesday
Mike Ashley's Sports Direct International is on course to join the FTSE 100, six years after its badly received stock market flotation.
The retailer is expected to be confirmed as the latest addition to the leading index on Wednesday, the same day its annual meeting takes place at its Derbyshire headquarters.
Sports Direct's elevation to the UK's blue-chip index of leading companies comes just weeks after the Guardian revealed that more than 20,000 of the retailer's staff – some 90% of the workforce – are employed on controversial zero-hours contracts. The company has consistently refused to comment on its employment practices. Joining the FTSE 100 means investment fund managers who track the index will now be forced to buy shares.
Sports Direct joined the stock market in 2007 at 300p a share, with the Newcastle United-owner Ashley cashing in nearly £1bn in the process. The shares headed downwards almost immediately, and at one point hit a low of 32p.
City critics hit out at Ashley's management style and the lack of conventional communication from the company. But the pile-em-high, sell-em-cheap strategy, together with the demise of rival JJB Sports meant the business continued to grow. Last year profits climbed 22% to £268m.
The company was forced to scrap a lucrative share scheme for Ashley which could have paid him up to £60m after shareholder protests, and recent praise for its payment of bonuses of up to £100,000 to 2,000 staff lasted only until the firm's use of zero-hours contracts was revealed.
Sports Direct is now facing new competition in the form of Matalan, which has hired former JJB boss Tom Knight and a Sports Direct executive to run a new sports retailer called Intersport Sporting Pro. Matalan has identified six initial sites and has plans for 100 stores across the UK.
On Tuesday Sports Direct closed up 2.5p at 715.5p, valuing the business at more than £4bn.
Also joining the FTSE 100 in the quarterly reshuffle – pending final confirmation on Wednesday by FTSE Group – are Coca-Cola Hellenic Bottling, the Greek group which moved its main market listing to London in April, and South African packaging group Mondi. They replace troubled outsourcing group Serco, oil services business Wood Group and Eurasian Natural Resources Corporation, which is currently in the middle of a takeover attempt by its oligarch founders. ENRC's demotion would mean there were no former Soviet mining companies in the leading index following the departure of Polymetal, Evraz and Kazakhmys.
In the US, the Dow Jones Industrial Average saw one of its infrequent changes. Hewlett-Packard, Bank of America and Alcoa will all be removed from the 30-strong index, to be replaced by Goldman Sachs, Visa and Nike. The index has only been revised 53 times since its creation in 1907, and the last time there were three changes at once was in April 2004.
S&P Dow Jones Indices said the changes were prompted by the low share price of the three ejected companies and a desire to diversify the sectors and industries represented in the index.