Burberry's global reach makes it a hold

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The Independent Online

But while Burberry may still be struggling to regain its sense of exclusivity in the UK, its association with chav culture does not stretch past British shores. In Asia and the US, Burberry is a classic British luxury goods brand, and a quarterly statement from the company yesterday said it was trading above expectations across the business. Underlying sales between April to June were up 9 per cent on last year.

And there is still plenty of growth available worldwide. It is opening up to five new stores in the US each year, and newly refurbished stores in Washington, Denver, Boston and Philadelphia have only just reopened, so the full effect of this investment is still to come.

As well as a strong geographic spread, Burberry also has different routes to market. These consist of its own retail outlets (stand-alone shops and concessions), wholesale sales to department stores and boutiques, and licensing deals. It has just bought a number of its wholesale distributors in Taiwan, turning them into direct retail operations that give it greater control over how its goods and brands are positioned. Licensing is still a small part of the group, but increased royalty payments are boosting revenues.

There are fears that Rose Marie Bravo, Burberry's chief executive who masterminded the revival of the brand, may not stay on beyond 2006. Her departure would be a real blow.

And at 437.5p, Burberry's shares are, as you might have guessed, not inexpensive. But it is diversifying away from the increasingly miserly UK consumer, and GUS, which owns 66 per cent of Burberry, is planning to divest its stake this year. This should greatly increase the liquidity of its shares. Hold.

It may be too late to board Icap

The world's largest inter-dealer broker Icap, the creation of Michael Spencer, the chief executive, is still making good progress. Its combination of telephone and electronic broking puts it in a good position to grow market share and profits margins.

Mr Spencer is determined to take the group's share of the electronic-broking market from 28 per cent to more than 35 per cent over the next few years - a leap he can only achieve through acquisitions. But the company refused to stump up enough for MTS, the Milan-based electronic bond market, which was recently acquired by Euronext and Borsa Italiana.

Markets for swaps and derivatives in 2005 are turning out better than last year and Icap yesterday reported a good start to its fiscal year. The rising dollar will benefit its profits, which are reported in sterling. But it has to find ways of offsetting margin erosion, which happens as banks push down commission rates. This can be done through increasing volumes and developing new products. One example is a new range of property-based derivatives that will let investors bet on the property market without owning bricks and mortar.

Emerging markets provide a big opportunity to expand and Icap is busy trying to form a joint venture with a local firm in China.

But given the sharp rise in the shares - they are up 15 per cent this year - we would not chase the stock at current levels.

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