Bottom Line: A long way to go

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SIR KIT McMahon, chairman of Pentos, may hope that the group's results will be good enough to justify a slap-up meal after next year's annual meeting, but shareholders would be wise to eat a hearty breakfast.

Yesterday's trading statement suggested the new management team has managed to stabilise the businesses after last year's like- for-like sales. Getting them to an acceptable level of profit will be a far harder task.

The 1 per cent like-for-like increase in sales at Ryman is unlikely to be enough to compensate for the impact of the price cuts it needed to win back customers. It may be right to aim for a richer, older customer at Athena, but whether it will be able to find a niche in the harsher 1990s remains to be seen. Closing or selling either business would devastate the balance sheet, so the losses are likely to have to be carried for some time yet.

A 3 per cent rise in sales at Dillons is no mean achievement, given that many publishers were refusing to supply stock until they got paid, but it is still suffering from an excess of space, much of it in the wrong place at the wrong price. Any change in the net book agreement would make its position much worse.

The pounds 45m rights issue has repaired its finances - payments to suppliers are now largely up to date - but with gearing still likely to be about 50 per cent, another cash call as its trading recovers cannot be ruled out. At 25.5p, unchanged on the day, the share price owes far more to hope than reality.