WH Smith has been losing sales to the supermarkets

The figure, which includes exceptional costs such as an expensive retreat from the US, compares with a �54m pre-tax profit for the same period last year.

WH Smith said it was already taking action to end operational shortcomings.

The firm also said it would be allowing its takeover suitor - private equity group Permira - to look at its books.

Work ahead

WH Smith chief executive Kate Swann said she believed the business had strong assets on which to build, despite the poor results, which were "the culmination of a number of years where the business has not fulfilled its potential".

I am afraid it (WH Smith) is one of those retail names that, if it was not already around, you wonder if anyone would bother inventing it today Retail analyst Paul Smiddy The problems facing WH Smith

"We have already taken action to strengthen the senior management team and address the operational shortcomings of the business," she said.

"The priorities are clear - reducing our central costs, addressing stock availability, improving the offer in store, strengthening our controls and processes and addressing our product ranges."

Before tax, goodwill amortisation and exceptional items, WH Smith's half-year profits were down �26m to �65m.

Poor sales figures and a slump in its share price over the past six months have left WH Smith open to predatory bids.

Permira's bid is being fronted by Simon Burke, the former head of Hamleys toy store and a former WH Smith board member, and Keith Hammill, chairman of menswear retailer Moss Bros and a former WH Smith finance director.

Supermarket squeeze

WH Smith has also announced job losses at its Swindon and London head offices.

WH Smith facts Founded 1792 by Henry Walton Smith Started as a newsvendor in central London Britain's leading news outlet by mid-19th century Founding family was ennobled in 1891 742 shops across the UK More than 31,000 employees Sales of �2.9bn in 2003 Outlets at major UK airports and railway stations

Along with retailers such as Boots the chemist, WH Smith is often called a "legacy brand".

Simply put, this is a company that has been around for a long time, that worked in the past but is struggling today.

WH Smith has been losing customers to supermarkets such as Tesco who offer cut price compact discs, DVDs and books.

However, despite its problems, many analysts see WH Smith as a company that still has potential.

Its 742 shops are spread across the UK in many top shopping areas, as well as airports and railway stations.

The brand and logo are also easily recognisable.