Barratt has its house in order

Menswear chain Ted Baker worth holding on to; Tottenham still looking to earn its off-field Spurs
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The Independent Online

Barratt Developments has managed to triple its annual rate of homebuilding over the past 12 years, without acquisitions and despite an increasingly slow planning system.

Barratt Developments has managed to triple its annual rate of homebuilding over the past 12 years, without acquisitions and despite an increasingly slow planning system.

The company, which reported sparkling interim figures yesterday, looks set to expand production further. Not only is output from the whole industry likely to be boosted by an easing of the regulatory system, following the recent Barker review, but Barratt is pressing ahead with an initiative to pre-fabricate houses in a factory.

Following a successful trial, in the next few months Barratt's new factory in the Midlands will start producing homes that will then be trucked to sites in sections. That will reduce its vulnerability to the British climate and its dependence on skilled labour, of which there is a shortage.

Output should rise from 14,000 homes this year to 16,000 in 2006. However, it will be many years before the industry's output will catch up with demand.

Barratt said it would welcome another couple of quarter- point interest rate rises, to "moderate" the housing market. Obviously, if rates shot up to 10 per cent then all bets would be off, but the likely economic scenario is benign.

The company reported a 35 per cent jump in pre-tax profits to £142.6m for the six months to 31 December. The average price achieved rose 11 per cent to £161,700 and sales volume was 10 per cent higher.

For the rest of this financial year, 93 per cent of target sales are already in the bag, while 90 per cent of the planning permission needed for the next financial year's output has already been achieved.

Barratt could buy one of the medium-sized builders but David Pretty, the chief executive, does not seem particularly keen on the idea. He pointed out that the company spent £700m a year buying land anyway - equivalent to a sizeable acquisition.

The shares closed up 7p at 600p, putting the stock on a forward multiple of six. That's cheap. Buy.

Menswear chain Ted Baker worth holding on to

Ted Baker, the trendy retailer that started life as a menswear brand from a single Glasgow store in 1988, hardly put a fashionable foot wrong in 2003.

The group, run by its ebullient founder Ray Kelvin, is carving itself a profitable niche as a "lifestyle" brand by expanding into areas such as shoes, sunglasses and even homeware.

Although retail sales, up 26 per cent last year to £61.3m, still account for two-thirds of group turnover, its wholesale and licensing arms, which sell via some of the world's swankiest department stores, are growing equally strongly.

With the UK already smitten, Ted has set his heart on wooing the US. A fourth store, in San Francisco, is set to open later this year, while yesterday the company announced a three-year extension to its wholesale licence agreement with its US partner Hartmarx. Despite favouring a slow and steady approach to expansion, Mr Kelvin hopes to have 30 stores trading in the US by 2008. In the UK, the big focus is on the new store opening in Covent Garden that opens next month. If it's half as revolutionary as the group says, it will at least attract a few new shoppers.

Yesterday's full-year results beat expectations, with pre-tax profits almost doubling to £13.9m against last year's numbers after favourable one-off charges. A big Ted fan club in the City has helped chase the shares higher since we tipped them last year - indeed they have more than doubled in the past 18 months. Yet another Burberry Ted ain't, which leaves the shares, down 9p at 433.5p, looking fully valued at about 17 times earnings. Hold.

Tottenham still looking to earn its off-field Spurs

Tottenham Hotspur yesterday issued a textbook lesson from football's financial boot room. The question now is whether any stock market players will take note of it.

The six-monthly results from Spurs to 31 December were relatively upbeat. The company maintained turnover at £33.2m and even reduced its loss before tax from £8.6m to £3m. Total gate receipts were £1.1m higher thanks to the oft-maligned Carling Cup fixtures. A £15m fund raising in January, after the interim period closed, has allowed the club to keep investing in the playing squad. However, Daniel Levy, the chairman, warned there was still "significant uncertainty" within the industry affecting the liquidity of the player market.

Nevertheless, the club can hardly be said to be thriving. Premier League gate receipts fell at the club during the six months because of its poor on-field form, which has a direct bearing on its off-field results. Broadcasting turnover increased £600,000, match day hospitality sales increased 3.8 per cent but the top line was still flat.

The club should be congratulated for reducing its losses but the tactic for investors should remain the same; avoid football clubs unles you are a die-hard fan who, having already spent thousands following your team, won't mind throwing away a bit more.

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