The Investment column: Peacock displays attractive assets

Shed show should produce big profits
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The Independent Online

Peacock Group is confident it can put the bon back into bonmarché. The company's core Peacock discount clothing chain is accustomed to both soaring like-for-like sales and profit growth, but it is having a much trickier time with bonmarché - aimed at women aged over 55 - which is making less money now than when it was acquired three years ago.

Peacock Group is confident it can put the bon back into bonmarché. The company's core Peacock discount clothing chain is accustomed to both soaring like-for-like sales and profit growth, but it is having a much trickier time with bonmarché - aimed at women aged over 55 - which is making less money now than when it was acquired three years ago.

Although group pre-tax profit rose 8 per cent to £35m for the year to 31 March, this masked a collapse at bonmarché, where profits have more than halved to £7.4m.

There are two fresh pairs of eyes looking at the troublesome division, in the form of a new retail and marketing director and a new buying director. Richard Kirk, the group chief executive, thinks the answer lies in making bonmarché clothing more fashionable. Underlying sales edged into positive territory at the end of the year and analysts have faith in the group recouping the entire profit shortfall this year.

The 7 per cent fall in underlying sales at bonmarché last year contrasted with a 9 per cent jump at Peacock. Customers there have taken well to its reincarnation as a fashion rather than basics-focused chain. Given the rate at which sales are going backwards on the high street, the performance of the core chain is a real feather for the group cap and should give confidence that management can get bonmarché right. The company also has a handy third string in the form of The Fragrance Shop, acquired last year and which has already made a £1.1m profit contribution from its 50 outlets.

All three of the group's chains are targeted firmly at the value end of the market so, if consumer confidence does stay depressed, Peacock should manage to flap hard enough to keep its beak in front. If it doesn't, there is every chance that the private equity bidder sniffing around this year will return, not least because the shares - on a profit/earnings ratio of about 8 times - are on an undeserved discount to the sector. Up 8.75p yesterday to 229.25p, they are a long-term buy.

Shed show should produce big profits

While fans of Footballers' Wives were agonising over whether Lucy would escape the suicidal Giles when the fourth series finished last week, the management of the production company behind the television show was counting up its riches.

The drama sensationalising the antics of overpaid footballers and their stiletto-toting superbitch girlfriends, helped Shed Productions almost double turnover to £12m for the six months to 28 February, while pre-tax profits were up nearly fourfold to £2.3m.

Will Shed be able to win more commissions? Or will the evil broadcasters thwart its plans? It's a cliffhanger.

It ought to turn out well, though. A fifth Footballers' Wives series has been commissioned and Shed is also behind the long-running Bad Girls series and The Fugitives for kids. An army drama, Bombshell, is due on our screens this year.

Previously tied solely to ITV, Shed can now offer its ideas to other networks thanks to the new Communications Act, which forces broadcasters to use more independent producers. It also means indies can hold on to their intellectual property, giving the opportunity for revenues from DVDs and international sales.

With no long-term debt, high cash generation from its existing successes, and a strong reputation, Shed is a dependable character.

Shed shares are now below their March flotation price on a more reasonable 15 times 2005 earnings. Down a few glasses of Chardonnay, put on your tightest, most revealing outfit, assume your pout, and splash out on the shares.

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