WH Smith said that full-year UK retail sales fell 2% in “a difficult year following a disappointing Christmas trading period”.

For the year August 31 pre-tax profit for UK retail was down 13% to £102m on a decline in sales from £1.50bn to £1.48bn.

Chief executive Richard Handover said that stationery and news categories had traded “satisfactorily”, with good magazine sales - up 4% - as a result of the continuing interest in the celebrity market.

Phonecard sales continued to decline, falling by 55%. The group was also hit by losses of £2m relating to Connect2U the online ordering system used by retailers.

However, weak sales within the entertainment category continued throughout the year and “severely restricted overall profitability”. Entertainment category like-for-like sales fell 6% in the second half due to competition in the CD market.