Peacock continues to impress

Maiden's price high enough for now; Starting a new life has paid off for Durlacher
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The Independent Online

The discount clothing chain Peacock has more than a little something of the Ugly Duckling about it. A makeover for its down-at-heel Peacocks' store estate has transformed the group into the swan of the value retail market - more likely to be revered than mocked by its peers.

The discount clothing chain Peacock has more than a little something of the Ugly Duckling about it. A makeover for its down-at-heel Peacocks' store estate has transformed the group into the swan of the value retail market - more likely to be revered than mocked by its peers.

Yesterday's trading statement showed that fourth quarter like-for-like sales had continued to fly higher at its core Peacock chain, rising 5.5 per cent, even if underlying sales were less impressive at its bonmarché arm. The 13.6 per cent shortfall at bonmarché, which targets the 60-plus woman, meant group like-for-like sales slipped 1.8 per cent during the past three months, despite rising 3.5 per cent during the year.

Richard Kirk, the chief executive, argues that bonmarché's sales were weak only because they were up such strong comparisons: this time last year underlying sales rose 17 per cent after the group cleared out excess stock at cost price. Besides, gross margins leapt 700 basis points during the quarter, so the bottom line won't have suffered.

Where profits will have suffered, though, is from Woolworths' decision last week to axe its big W out-of-town format. Peacock's contract to supply the stores was worth £4m - or 10 per cent of its pre-tax profits. Although analysts' brought down their numbers slightly on the news, the effect was mitigated by Peacock's announcement last week to migrate east - to the Middle East - where it plans to open up to 40 new stores via a franchise agreement.

The group's move to jazz up the clothes on sale at its 400-strong chain has paid off in spades - not least because more fashionable togs means it can charge more for them. The company is close to announcing a big deal to open more sites in Somerfield stores. This, and the profit growth coming through from the bonmarché chain, means another year of double digit earnings growth.

The shares, up 8p at 209.5p, have soared since this column tipped them last May, yet still look good value. Buy.

Maiden's price high enough for now

Outdoor advertising and radio were the only two sectors of the media industry that saw growth in 2003. Even so, it was a tricky year for both sectors, as full-year results from Maiden Group, the billboards company, showed.

Look forward, the trading environment is improving rapidly across the media industry, as companies seek to market themselves more heavily again. Businesses are going for growth, after the retrenchment of recent years, and need to advertise themselves.

Maiden said that it had seen record sales for the first quarter of 2004 and it expects "encouraging improvement in the middle quarters" of this year.

Last year demonstrated the resilience of the outdoor advertising sector though it did not come without its challenges. After a good first quarter, Maiden suffered five difficult months. The company responded by cost-cutting.

Turnover increased to £88.1m in 2003, from £82.1m in 202, as UK billings grew 8.2 per cent. Pre-tax profits, before amortisation, was £5.3m, down from £6.4m previously. The City is still waiting for news on Maiden's important rail contract.

The difficulties for Maiden were reflected by the fact that, as the company confirmed, it breached its banking covenants at the end of last year. However, it said that, since the year end, it had agreed a new facility with its existing syndicate of banks.

The outdoor sector continues to wrestle share from other media sectors, taking an estimated 9.0 per cent of the display media market in 2003. In 2004, outdoor is expected to exceed 10 per cent market share for the first time. So the prospects for this sector of the media industry are healthy.

Maiden shares, which closed unchanged at 270p, trade on a forward multiple of 21, which seems high enough.

Starting a new life has paid off for Durlacher

Durlacher has spent the past six months trying to start its new life as just another ordinary investment bank, having cleansed itself of all evidence that, four years ago, its business was dominated by the dot.com boom.

Just as its clients slumped when the bubble bust, Durlacher has also had a lot of recuperating to do. It has almost completely changed its staff and sold off, or written down, substantial stakes in hi-tech companies.

Durlacher now focuses on offering services to small and medium-sized companies which are neglected by the mega investment banks and now has the largest sales team focused on smaller companies in London.

It is also on the hunt for a fund management business to buy.

The company severed its ties with its loss-making private client arm last year, though the sale proceeds - up to £4.15m - will not be booked in full until September next year. Overall, its loss for the 12 months to 31 December was £4m.

Although the company's shares yesterday slipped 6.5p to 127.5p, Durlacher was upbeat, saying that it has 10 deals in the pipeline for the next few months. Given the leanness of the business now, they should have a healthy impact on Durlacher's bottom line. Buy.

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