Newsagent and distribution group WH Smith posted a slump in half-year profits after being dragged down by tough trading in the US.

The group, which operates shops in hotels and airports in the US, has been rocked by the country's economic slowdown.

It has also been affected by the terrorist attacks of September 11 and the subsequent slump in tourism, as airline passenger numbers and hotel occupancy rates dwindled.

The tough conditions meant the group's US division fell into the red for the six months to February 28, with operating losses coming in at £12m compared to profits last year of £6m.

Sales at the arm slumped 12 per cent to £100m, and by 18 per cent on a like-for-like basis.

Chief executive Richard Handover said: "Trading in the US travel retail business continues to be difficult following the September 11 terrorist attacks, although sales trends are gradually improving."

WH Smith is seeking to slash costs in the arm and measures include closing hotel-based stores and reducing central costs.

The group said this would "favourably impact" the operating results in the second half.

The poor performance in the US came despite "satisfactory" trading elsewhere in the group.

UK retail sales were up eight per cent at £868m or six per cent on a like-for-like basis, with both its high street and travel operations reporting growth.

News distribution saw sales jump from £507m last year to £538m, which was driven by newspaper price increases and a surge in volumes.

Newspaper sales were up 11 per cent, while magazine sales were three per cent ahead.

In its publishing arm - WH Smith owns Hodder Headline - profits were flat at £9m but the group said it had strong pipeline of releases over the coming months.

Overall, WH Smiths reported an increase in interim group sales, from £1.44bn to £1.58bn. Pre-tax profits slid from £100m to £63m.

Shareholders will receive an interim dividend of 6p per share, the same as last year.