ONE of the worst chapters in WH Smith's 212-year history was laid bare yesterday after its core UK business wilted in the face of competition from price-cutting rivals.

With an "unacceptable performance" on the high street and a raft of one-off costs, WH Smith racked up losses of £135m over the year to the end of August.

The company's failure to compete with cheaper supermarkets was blamed for the slump as WH Smith joined mid-market counterparts Marks & Spencer and Boots in feeling the squeeze from Tesco and Asda's growing presence in non-food.

However, chief executive Kate Swann received a boost from the City when shares rose on the back of her strategy update to analysts.

She wants the business to focus more on the company's 673 UK outlets and ensure that WH Smith restores its authority in stationery and books.

However, Ms Swann - recruited last year from Argos retail group GUS - warned against an immediate upturn and said Christmas was likely to be tough.

Yesterday's losses compared with profits of £52m a year earlier and included £200m of exceptional items.