WH Smith plc, a British newspapers, books and stationery retailer, posted a worse-than-expected fall in underlying sales for the key Christmas period but said better margins meant profits met expectations.

The group said on Monday sales at stores in its town centre business open more than a year fell seven per cent over the 20 weeks to January 17.

The result was worse than analysts' expectations of a decline of about five per cent and compares with fall of four per cent for the 10 weeks to November 8.

In the travel business - stores at airports, train stations, motorway service areas and hospitals - like-for-like sales were down one per cent.

This compares with a flat underlying sales performance in the earlier 10-week period and analyst forecasts of flat to minus one per cent.

However, the fall in sales was offset by much better profit margins.

Chief executive officer Kate Swann said gross margins were up 200 basis points in the high street business and up 60 basis points in travel.