WH Smith might be getting back on track after a substantial profits improvement.

Although sales were down one per cent in the six weeks to January 15, profits compared to last year were up because fewer unprofitable promotions were used in its 673 stores.

In 2003 the retailer, which employs about 1,000 people in its Swindon headquarters, had a Christmas from hell.

Profits dropped 20 per cent in the three months up to Christmas and a profits warning was issued.

Early last year new chief executive Kate Swann announced an internal review and a management reshuffle and in April 300 jobs were lost.

In October WH Smith announced annual losses of £135 million, but there have been no indications that any further jobs are at risk.

Many analysts said Smiths was doomed unless it reorganised quickly, as supermarkets were undercutting books and CDs and stationery was not performing well.

But Ms Swann, the former boss of Argos, asked for time to turn the company round.

Yesterday she said: "This is a long-term recovery programme and much remains to be done however, we are back on track and confident in the outcome for the year."

WH Smith has attributed the improvement to better product availability, improved buying terms and an encouraging performance in the stationery ranges.

But many mainstream DVD blockbusters failed to meet targets and book sales were lower than last year.

The book section saw the biggest cutback in unprofitable promotional deals.

During the year there have been several upheavals.

The publishing arm Hodder Headline was sold off and overseas stores were closed, with the aim of concentrating on the British high street.

The exception to this is the series of stores in airports around the world, which saw a four per cent sales increase.

However, WH Smith's results are good compared to many other high street stores' Christmas performance.

The last festive trading period has been described as the worst for a decade, with big-hitters including Marks and Spencer, Peacocks, JJB Sports and Woolworths all posting disappointing profits, and even Next reporting lower than hoped for sales.