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LONDON, April 19 (Reuters) - Britain's WH Smith (SMWH.L: Quote, Profile , Research)said on Thursday it has struck a deal with the Royal Mail to runservices provided by the state-owned postal service in 70 of itsstores in an attempt to stem falling sales.

It also announced a 6 percent drop in first halflike-for-like sales to 721 million pounds as problems on thehigh street outweighed growth from its stores at train stationsand airports.

Post Offices, which as well as offering traditional postalservices also sell insurance and foreign currency, have beenunder pressure and closing at a steady rate in recent years.

WH Smith, which split from news distribution business SmithsNews (NWS.L: Quote, Profile , Research) in September, said profit before tax andexceptional items rose 7 percent to 59 million pounds ($118.5million) as cost savings offset the sales fall.

It made 51 million pounds from its high street stores and 15million from its travel stores, in line with analystsexpectations, and said it had so far cut 8 million pounds ofcosts, 1 million more than analysts had forecast. Continued...

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