Struggling retailer WHSmith has admitted that its high street shops had delivered an “unacceptable” performance as it confirmed City forecasts of a 29 per cent drop in half yearly profits.

WHSmith said that the poor showing by the main retail business had been the culmination of a “number of years where it had not

fulfilled its potential”.

The group said pre-tax profits before goodwill and one-off items in the period to February 29 were down by £26 million to £65 million, while pre-tax losses after exceptional items had climbed to £72 million from £54 million previously.

However, it said its news distribution and UK travel retail activities performed well in the first half and the underlying result in its

publishing business was strong. WH Smith confirmed

speculation that it was planning to sell its Asia Pacific businesses, saying the sale was under way.

The group said it was cutting its interim dividend to 4p from 6p at the same time last year. It added that its board had allowed private equity group Permira, which has approached it about a potential takeover bid, to conduct due diligence on the company. On Sunday, the group said it was cutting 300 jobs at its offices in Swindon and London.

WHSmith said operating profits before goodwill and exceptional items in its UK retail business had fallen by 39 per cent to £51 million.

Recently arrived chief executive Kate Swann said the group had already taken action to strengthen its senior management team and to address the

“operational shortcomings” of the business.

She said priorities included reduction of central costs, improvements to stock availability and product ranges and strengthening of business controls and processes.

“We need to reinstate our authority in the high street and to re-establish a compelling consumer offer to generate earnings growth,” Ms Swann said. “I am convinced of the potential for profitable organic growth through a return to sound retailing disciplines and rigorous execution of our plans.”