Ref. 72734-55WH Smith may have been the first stop for people's book and stationery needs for decades but it has plunged into the red for the first time since 1996.

Poor sales and weak Christmas trading have left the Swindon-based high street retailer with a massive £135m annual loss.

The company, which has its headquarters at Greenbridge, has seen profits nosedive from £52m last year, despite a package of measures to stem the haemorrhage and revive its fortunes.

Chief executive Kate Swann said: "This has been a poor year for the group.

"The high street retail business delivered an unacceptable performance following weak Christmas trading."

Not long ago Ms Swann unveiled a turnaround strategy for the troubled firm.

Yesterday she said: "While we still face considerable challenges, we have begun to position the high street retail business to meet these more effectively."

The company's high street retail sales fell by two per cent to £1,145m this year.

Book sales were down by two per cent but stationery sales were up by two per cent.

However, there has been a continuing decline in the sales of music and VHS and multimedia goods, although DVDs sales have increased by 20 per cent.

Also on the plus side, sales in the firm's travel retail businesses such as shops at ports and airports grew by three per cent to £301m.

Ms Swann said: "Current trading is in line with expectations.

"Although we are making pro-gress in improving the business, much remains to be done.

"And we expect to face tough competition in our core markets this Christmas."

The group has also sought to simplify its business by selling a series of overseas operations and its Hodder Headline book-publishing arm.

Since taking over, Ms Swann has boosted ranges of stationery, cards and magazines and sought to reinstate what she calls "sound retailing disciplines."

Dennis Grant, the chief executive of Swindon's Chamber of Commerce said one of the problems with WH Smith is that there is no particular product associated with the firm.

He said: "WH Smith has changed very little from 15 years ago.

"Yes, there has been a lick of paint here and there,

"But nowadays you can buy your newspaper and magazines from anywhere.

"And there are many reputable dealers of books and music on the Internet.

"At the end of the day, however, I think Kate Swann should certainly be able to turn the company around.

"WH Smith is a brand name it might be tarnished, but its still a brand and once you have that you can do with it as you wish."

Earlier this year, the company, which currently employs a total of about 1,300 people in Swindon, received a take-over bid from Permira but the offer was withdrawn in July.

The store's history

WH Smith's history can be traced back to as early as 1792 when Henry Walton Smith and his wife Anna opened small news vendors in Little Grosvenor Street, London.

By 1850 the company was recognised as the principal newspaper distributor in the country, acquired wholesale distribution warehouses in Dublin, Birmingham, Manchester and Liverpool.

By 1903, the company's first overseas branch opened in Paris, and in 1967 the firm's centre of book and stationery distribution moved to Swindon from Bridge House, Lambeth.

Now the company has 553 high street stores, 220 travel stores and its website, WHSmith.co.uk which serves customers on the Internet worldwide.

The company also employs almost 20,000 people across the UK.