Wednesday tips round-up: Burberry Group, Hargreaves Lansdown

16th Oct 2013 09:11

All management changes create uncertainty, but Angela Ahrendts' departure from the top post at Burberry Group creates more than most, what with the Finance Director having been in place for just three months and the Chief Operating officer for seven. Sir John Peace, the Chairman has been there for more than 11 years so change might be on the way there, too, the Financial Times' Lex column explains. In operational terms, wholesale revenues have been falling and the company is trying to expand its beauty business. More important, emerging markets growth is slowing. The big question is what Bailey will do if the slowdown becomes more serious, hampering Burberry's ability to spend on new stores, new designs and new technology. Capital spending in the year to March 2013 was more than double the level it was in 2010. So far cash flow has covered that and left lots of room for a dividend. Finally, Miss Ahrendts' replacement, Christopher Bailey, is a "creative" type and has never been on the board. This might be good, but all in all the changes may be a bit of a step into the unknown for the company. Clients at Hargreaves Lansdown who were not able to sell their Royal Mail shares on Friday should probably be thankful. That IPO however will likely turn out to be quite positive for the broker as well. The experience of previous privatisations has been that they have stimulated the buying of other shares by retail investors.?In any case, there is a long-term trend towards investors managing their own funds rather than relying on expensive advisors. Further, rising markets are a virtuous circle for Hargreaves Lansdown because they encourage retail customers while the charges that it levies increase. As well, the upcoming second phase of the Retail Distribution Review - imposing greater transparency on charges - will probably only help the company. The shares sell on about 28 times earnings, which looks high, but traditionally they have enjoyed a high multiple and so far justified it. Hold, says The Times's Tempus. Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.