WH Smith is trying to lure customers from its competitors

It has been renegotiating contracts with suppliers as it tries to offset sliding sales and competition from internet retailers and supermarkets.

Pre-tax profit in the six months to 28 February was �61m compared with a loss of �72m a year earlier.

Chief executive Kate Swann said she was confident about the outlook for the year despite tough trading conditions.

The company said that in the seven weeks to 16 April, retail sales were flat.

While growth is still proving hard to come by, the latest figures show that WH Smith has at least managed to stem the previous rapid decline in sales.

WH Smith shares rose 21.50 pence, or 6.25%, to 365.25 pence by the end of trading in London.

Tough times

Matthew McEachran, an analyst at Investec Securities, said sales were better than many people had predicted and WH Smith's performance was good considering the problems facing many retailers.

Consumer spending is proving sluggish at a time when internet retailers and supermarket chains such as Tesco are cutting prices to lure customers.

Tough job for Swann Check WH Smith's share price

WH Smith said that High Street like-for-like sales fell 3% in the six months, while retail sales slid 2% to �816m and revenue from books declined by 3%.

Entertainment sales, one of the most competitive sectors for retailers, tumbled 12% on last year.

There were bright spots, however, and WH Smith said that its gross margin rose to 40%. Stationery sales were up by 4%.

"The improvements in gross margin more than compensated for the decline in sales volumes," WH Smith said in its statement.

Revival bid

Ms Swann was brought in from retailer Argos in 2003 to revive the chain's fortunes.

She has rejigged the firm's management and sold off businesses, including publisher Hodder Headline.

The company said that it had delivered cost savings of �13m "faster than planned" and was "on track to deliver 3-year cost savings of �30m as previously announced".

In October, WH Smith posted a loss of �135m after it was hit with exceptional charges relating to unsold stock and restructuring costs - one of the worst losses in its 221-year history.

At the same time, talks with Permira over a possible �940m takeover deal fell through.