Top jobs to go in WH Smith crisis

BELEAGUERED High Street retailer WH Smith will kick off the New Year with a dramatic profits warning - and the disclosure of hundreds of job losses at head office, including senior figures.

According to sources at the country's biggest newspaper and book retailer, new chief executive Kate Swann has earmarked early January for a 'significant profits warning' and will use the opportunity to outline a shake-up of head office.

At least half of WH Smith's eight-strong retail board are likely to be axed, including Beverley Hodson, managing director of UK retail business, who was at one time tipped to take over as chief executive.

Hodson recently received a special payment of £112,200 after being passed over for the top job.

Also on Swann's hit list are 'hundreds' of the 1,000 staff at the head offices in London and Swindon, Wiltshire.

Next month's announcement will also confirm what many in the City have forecast - that WH Smith will have a disappointing Christmas.

The retailer has been dogged by problems with its distribution systems and left with empty shelves at the most crucial time of year.

Even the much-heralded new-format store in Guildford, Surrey, which features comfortable chairs for magazine browsers and a full-time children's host to demonstrate crafts and read stories, is said to be losing money, according to the company sources.

Since Swann joined last month from GUS, the Argosto-Burberry conglomerate, she has employed teams of consultants to look into every aspect of the business.

Although the exercise is incomplete, headhunters have already been briefed to search for replacements for the senior managers who are earmarked to go.

WH Smith issued two profits warnings this year before Swann joined.

The latest, in August, blamed flat sales at its 550 stores on tough competition and the long, hot summer when people turned their backs on High Street shopping.

As a result, analysts downgraded their profit expectations for the year by £12 million to £105 million. However, broker Credit Suisse First Boston went still further last week and lowered its forecast to £99 million.

Sales of entertainment products such as CDs and DVDs, which make up 20% of total WH Smith sales, were blamed as well as huge competition in the gifts market.

WH Smith said: 'We are not in any position to comment on our trading performance or any other operational issues until we have been through the Christmas trading period, which is a critical time of the year for all retailers.'