British book retailer W.H. Smith announced better-than-expected results for a tough year in which the company concentrated on its core products, bought a major U.K. publishing house and offered a free online service that attracted 205,000 users. Tim Hely-Hutchinson, CEO of Hodder Headline, the publisher W.H. Smith acquired in May, acknowledged that he was interested in acquiring a U.S. publisher but had not yet found a suitable firm. He declined to comment on rumors that Simon & Schuster might be the likely target.

Business was up in the U.S., where book sales rose 12% and travel retail sales 3% to £178 million and the operating profit rose from £9 million to £13 million. Hodder Headline performed strongly with sales up 7% and profits 17%. Richard Handover, CEO of W.H. Smith, called it "a very good business with strong growth prospects." WHS reported pre-tax profit of £134 million for the fiscal year ending August 31. Handover noted that comparable operating profits for the business as a whole were up 10%, with the retail side up 18%, to £79 million.

In line with plans announced last year, WHS has concentrated on what it d s best: selling books, magazines and stationery. Book sales were up 5%, to £280 million; sales of the company's own brand book titles brought in £6 million.

In May, W.H. Smith Online launched a free Internet portal, but despite a 76% increase in online sales from £3 million to £5 million, with books accounting for £4 million, losses on the venture rose from £1 million to £3 million. Handover said the site had attracted 95,000 active users over the last 40 days alone, and he is optimistic about achieving a 30% share of the U.K. online book market within three years in spite of strong competition from rivals such as Amazon.co. uk and Bertelsmann's Bol.com.

Future plans include a new shop format that will integrate online and store shopping, providing customers with what Handover called a "a seamless service" that will make books available at home, in the High Street or at an airport. The new format will be tested at U.K. railway stations and at U.S. airports beginning next spring.