WH Smith (LON:SMWH)

Good morning. Interesting trading statement from W H Smith (SMWH). Despite reporting LFL sales down 5% for the 20 weeks to 20 Jan 2013 (which would normally be pretty disastrous for profits), they report a "good profit performance" (although not quantified in absolute, or relative terms).

This has been achieved by tightly controlling costs, and a planned strong increase in gross margin. This is pretty impressive, I've not heard of such a big (5%) drop in LFL sales being recouped through margin improvements & cost control before.

I still can't shake off the feeling that W H Smith is an accident waiting to happen - it's as old economy as you can get - books, greetings cards, travel, etc. Yet somehow it still manages to not only survive, but to apparently prosper. Perplexing.

Wynnstay (LON:WYN)

Wynnstay (WYN) is an agricultural products group, but reading their results (Finals to 31 Oct 2012), they also have a retail division, including 21 pet stores, so a potential roll-out story there perhaps?

They report record results, with revenue up 9% to £376m, and profit up 13% to £7.8m. Note the wafer-thin profit margin there. EPS is up 16% to 35p. That is ahead of forecast of 32.8p EPS, so looks good, but a share price of 468p means the PER is 13.4, not exactly a bargain.

The divi yield of 1.8% is unexciting too (total of 8.5p for the year). It has debt  of £13.8m (compared with a £79m mkt cap), so all in all this looks fully priced to me, so not of any interest.

£10m mkt cap computer games company Zattikka (ZATT) has disappointed in its short history as a Listed company, with the shares halving after a profits warning in Nov 2012. Their trading statement today indicates that things are not getting any worse, with trading in line with the expectations set out in Nov. I generally avoid this sector, after several bad experiences in the past. These companies constantly have to run to stand still, with frequent profits warnings if new releases (which have an extremely short shelf life, but up-front costs) flop, as inevitably they will from time to time.

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