Games shine in HMV Xmas sales recovery

But the good news can't hide a first-half pre-tax loss of £31.8 million for the overall HMV Group, which comes after the company's profit warning in December.

The increase in market share of games was driven by strong sales of titles for new consoles, including Microsoft Xbox 360, PSP and Nintendo DS.

But the report, which covers the five weeks ended January 6th, also shows a drop in like-for-like sales of 0.8 per cent for the entire HMV Group – which includes HMV and Waterstones – and confirms that managing director Steve Knott is to leave the business.

Over Christmas, HMV enjoyed a rise in total sales of 3.7 per cent, bolstered by a good performance from its website – which enjoyed a 200 per cent sales growth over the course of the year.

However, Waterstone’s like-for-like sales for the five weeks before Christmas were down two per cent on the previous year.

CEO of the HMV Group Simon Fox said:

"The markets in which we operate continue to be very difficult.  However, we delivered an improved performance at Christmas, particularly at HMV UK where we achieved strong gains in market share.

"The actions the Group has taken to improve its competitive position are yielding benefits, but these are not sufficient to offset the profound changes taking place in our markets. We will do more to build upon the initiatives taken in 2006 to drive the business forward, and we will be updating the market with those plans in March."

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