WHSmith could demerge its travel and high street arms as early as this financial year, some analysts believe.

For the first time in the retailer’s history its travel arm contributed more to the full-year bottom line than the high street division.

The stationer and bookseller’s travel business accounted for 51% of profit from trading operations in the year to August 31, with operating profits rising 10% to £53m. High street shops clocked up a 4% rise to £51m.

Oriel analyst Jonathan Pritchard said: “These results further increase the possibility that before long the travel and the high street businesses will lead different lives.” He added a demerger is likely to happen “at some stage this financial year”, enabling a higher valuation of the travel arm.

The strong performance came as the retailer revealed the acquisition of Funky Pigeon in the summer, representing its first big move into online personalised greetings cards.

Group marketing director Richard Cristofoli said: “It’s a natural extension for us. We wanted a new and distinctive brand and offer. This is our big move. Moonpig has had it to themselves up until now.”

Since the year-end the retailer also purchased the Gadget Shop brand. Cristofoli said “new and exciting” gift products would be developed to be sold online and in WHSmith stores in time for Christmas 2011.

In the year group pre-tax profit rose 9% to £89m. Group revenue declined 2% to £1.3bn and like-for-likes fell 4%.

WHSmith said it sold more higher margin products such as books, confectionery and drinks.

Cristofoli said the profits results were “slightly ahead of expectations. The high street delivered a good year and it was a record year for travel”.

He said that WHSmith remains “very cautious about consumer confidence”, adding: “We won’t drive sales at the expense of profits.”

He said he hopes for a good Christmas in books because of a “more promising” line up this year than last, including titles from Michael McIntyre and Judi Dench.

The retailer intends to open another 50 stores in hospitals in the next five years, and 40 more workplace shops compared with eight now. It will also open 12 airport units. WHSmith opened eight high street shops in the year, taking the division’s store count to 573.

Execution Noble analyst Sanjay Vidyarthi said WHSmith “continues to navigate difficult trading conditions with aplomb, pulling gross margin and cost levers” to offset high street sales decline.