HIGH Street retailer WHSmith issued a profits warning following poor Christmas sales.

It warned job cuts could follow at its head offices amid concerns that annual profits would be materially below market expectations.

Analysts immediately cut their full-year forecasts for WHSmith by nearly 40 per cent, and expect the group to report profits of £65m for the current trading year.

Retail expert Richard Ratner, of stockbrokers Seymour Pierce, said other retailers were likely to follow WHSmith in issuing profits warnings, adding: "What has emerged can only be described as disastrous."