British retailer WH Smith met analysts' forecasts Wednesday as it reported a decline in sales for the holiday season.

The FTSE 250 company, which sells stationary, newspapers and books, said total sales were down 4.0% and like-for-like sales tumbled 5.0% for the 20 weeks to January 20th, according to trading update.

A majority of fall came from the group's High Street stores where sales dropped 5.0% and like-for-like sales declined 5.0%.

However, gross margin improved in the period in line with plan and costs were tightly managed, reflecting the trading conditions, according to the group.

The retailer added that it delivered good profit performance in the period with a margin well managed.

WH Smith ended the period with a strong balance sheet despite the sales drop.

As part of its aim to return up to £50m of cash to shareholders via a share buyback programme, the group purchased 2.48m shares at an average price of £6.38.

"During the period we saw a good profit performance across the group. Margin was well managed and costs were tightly controlled throughout the business," Group Chief Executive, Kate Swann, said.

"Looking ahead, we expect the trading environment to remain challenging however we are a resilient business with a consistent record of both profit growth and cash generation, and are confident in making further progress in the year."

Swann announced in October 2011 that she would step down as chief executive in July 2013. Steve Clark, who joined WH Smith in 2004, will take over from Swann.

Seymour Pierce Research commented on the results saying the company delivered a "reliant Christmas as management continued to focus on profitability rather than sales."

The market analyst reaffirmed its 2013 full-year results forecast of £106.9m (consensus £105.8) rising to £113.4m (consensus £111.3m) in 2014. It also reiterated its 'buy' recommendation and 750p price target.

Ahead of the trading update, forecasts suggested the retailer would report decline in like-for-like sales with as much as 5.0% at its High Street stores.

Nevertheless, WH Smith's shares rose more than 5.0% Tuesday after Numis upgraded the stock to 'add' with a target price of 710p.

Following Wednesday's results, shares were back down 0.84% to 646.50p.

RD

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