WH Smith has said it is braced for a competitive Christmas after reporting lower sales over the last 10 weeks of trading.

The retail group yesterday said like-for-like sales were down one per cent on a year earlier, with the performance from high street stores showing a two per cent decline.

However, this was better than the four per cent high street fall forecast by some analysts, as trading was boosted by the early release of popular books, including titles from celebrity chefs Jamie Oliver, Rick Stein and Nigella Lawson.

In the company's travel business, which operates from more than 300 sites at airports and railway stations, like-for-like sales were one per cent higher.

However, this would have been a three per cent increase had it not been for lower tobacco sales.

WH Smith recently reported underlying pre-tax profits of £66 million for the year to August 31, a 29 per cent improvement over last year and ahead of City forecasts of £63 million.

The company, which has 544 stores and is valued at around £688 million, said that as with other high street retailers, it remained wary of the future despite its steady start to the financial year.

It added: "Whilst we remain cautious about the consumer environment and anticipate competitive trading in our markets over the key Christmas period, the current financial year has started as we expected."

As part of recovery plans, chief executive Kate Swann has overseen a move away from a reliance on the highly competitive entertainment market, including CDs and DVDs, back towards its core books, stationery and confectionery markets.

Nick Bubb, retail analyst at Pali International, said: "The trading update flags that the new year has started quite well and although WH Smith say they are cautious about Christmas they always are cautious and yet they always deliver the goods, thanks to strong margin control.

"WH Smith has been active promotionally, to drive early footfall and remind consumers of the strong value they will get at Christmas."

He retained his above-consensus year to end of August 2008 pre-tax profit forecast of £75 million.

The company recently announced plans to open 71 Post Office concessions in its stores and it confirmed that the opening programme was continuing in line with expectations.

Ms Swann, a former Argos executive, joined WH Smith in November 2003 and set out a three-to five-year programme the following summer to rebuild the retailer "as Britain's most popular bookseller, stationer and newsagent".

Along with her senior executive team she is in line to share a £20 million payout as a lucrative incentive scheme nears its close. A new scheme is expected to be revealed next week.