Despite the success of the latest Harry Potter, book sales fell

The firm saw pre-tax, post-exceptional profits rise to �44m in the year to the end of August from �31m last year.

But like-for-like sales fell 4% as trading conditions remained tough and the firm focused on selling fewer, more profitable items.

"Spending in our categories remains subdued" chief Kate Swann warned.

Like-for-like sales of books, stationery and music all declined as the firm prioritised more expensive goods.

'Making progress'

But Ms Swann maintained that the firm's performance over the past year - in which it separated its retail business from its newspaper distribution arm - had been strong.

Profits from High Street stores rose 14%, although like-for-like sales were down 7%.

We continue to make progress in improving our customer offer Kate Swann, WH Smith chief executive WH Smith share price

Within that, book sales were down 5%, despite the popularity of the latest Harry Potter novel, while stationery sales fell 4%.

But the firm said it had stabilised its market share in book sales and widened its range of titles.

Sales of CDs, DVDs and other entertainment products fell 19%, which WH Smith blamed on less attractive new releases, price deflation and fierce competition.

'Competitive Christmas'

However, the firm's outlets at airports and train stations performed better - with profits rising 24% to �31m.

Total sales from retained businesses - excluding the newly demerged Smiths News operation - fell to �1.34bn from �1.42bn.

"We continue to make progress in improving our customer offer and rebuilding our authority in our core categories," Ms Swann said.

But she stressed that trading over the crucial Christmas period would be "competitive".