WH Smith has become the latest high street retailer to reveal a sales fall over the festive season but said better margins meant profits were up.

Like-for-like sales were five per cent lower in the seven weeks to January 21 although tighter cost controls than in previous years put profits above last Christmas and in line with expectations.

Chief executive Kate Swann said: "The Christmas trading period was as challenging and competitive in our markets as anticipated. Our strategy to focus on the bottom line has resulted in better margin performance and improved profitability."

WH Smith said it remained "cautious" about consumer spending.

At its 542 high street stores, which sell books, stationery, cards, music and games, like-for-like sales were down six per cent over Christmas and over the wider 21-week period to January 21.

But an increased emphasis on its most profitable items, such as books and stationery, helped improve margins.

Margins were further boosted by the refusal to offer suicidal discounts, which were originally introduced to compete with the likes of Tesco but hit profits. Like-for-like sales over Christmas and the 21 weeks were up three per cent at its 127 travel stores, located in places such as bus and railway stations.

Ms Swann said: "The top line improved in our travel retail business, and while like-for-like sales were down in our high street stores, this reflected the challenging environment and our commitment to drive profits rather than sell products unprofitably."

In its news distribution arm, which sells magazines and newspapers wholesale to other retailers, like-for-like sales were down two per cent over the 21 weeks.

WH Smith's top-selling books over Christmas included Sharon Osbourne's autobiography Extreme, Next To You by Gloria Hunniford, and Jamie Oliver's Jamie's Italy.

The top-selling DVDs were Madagascar and Charlie And The Chocolate Factory, while Now 62 topped the CD charts.

Ms Swann said WH Smith had managed to fight off increasing sales of books over the internet, as it took a 40 per cent slice of the market for Sharon Osbourne's book and 35 per cent for Jamie's Italy.

She said: "For most of the Christmas period we performed well in terms of market share, except for the last two weeks of December. In those last two weeks we actively chose not to chase market share with lower prices but instead to go after profits.

"I expect sales to return to historic market levels when consumer spending returns to more normal levels. Looking ahead, we remain cautious about consumer spending, and our plans reflect this."

Ms Swann said WH Smith would continue to concentrate on high margin goods such as books and stationery as opposed to CDs and DVDs.

Evolution Securities analyst Nick Bubb said WH Smith was becoming one of the "winners" on the high street.

Forecasting full-year pretax profits to reach £79 million retail expert Richard Ratner said: "Kate Swann is doing a superb management job."