Kate Swann says the recovery is on track

Like-for-like retail sales for the six weeks to 15 January were down 1% on the same period last year, WH Smith said.

However, it said it had increased profits by offering fewer discounted goods and through "tight cost control".

Chief executive Kate Swann - tasked with reviving the retailer - said the turnaround was progressing well.

Shares in WH Smith closed up 19 pence at 359.25p.

"Progress against our plan to deliver value to shareholders is encouraging", she said.

"This is a long-term recovery programme and much remains to be done.

"However, we are on track and confident in the outcome for the year."

On the mend?

Like-for-like total retail sales over the 20 weeks to 15 January were down by 2%.

"This sales performance reflects our planned focus on margin improvement, in particular not chasing unprofitable sales, and the difficult trading environment," WH Smith said.

See WH Smith's share price

WH Smith did not give details of what level profits were at, but said a gross profit margin improvement of more than two percentage points at its High Street stores was "greater than anticipated" and "cost savings have been delivered faster than planned".

The change in strategy followed a poor Christmas in 2003 when a plan to attract more shoppers by cutting prices failed to work and ended up damaging profits.

In January last year, WH Smith's share price fell 20% in one day after it was forced to issue a profit warning.

Kate Swann was brought in from retailer Argos to revive the chain's fortunes. She has introduced new management and sold off non-core businesses, including publisher Hodder Headline.

In October, WH Smith recorded a loss of �135m - one of the worst in its history - after it was hit with exceptional charges of �200m linked to unsold stock and restructuring costs.

Analysts said WH Smith had put in a good performance over a festive period which stores like Marks & Spencer and Woolworths had found tough going.

"The sales decline was less than expected and the gross margin improvement was better than expected," said John Baillie, at SG Securities.