Bloomsbury, the publisher, revealed last night that it had been hit hard by the absence of a new Harry Potter title, when it admitted that its 2006 profits could be 75 per cent lower than expected.

The company, in an early evening Stock Exchange statement, said that profits before tax “may be in the region of £5 million” — well below the £20 million to £20.5 million that City analysts had been anticipating.

A lack of bestsellers was one of the reasons cited for the shortfall, raising concerns that despite the publisher’s efforts it is still dependent on the Harry Potter franchise for financial success.

In the first six months of the year, Bloomsbury generated £4.2 million in pre-tax profit, implying that it generated almost no income in what should be its most lucrative half of the year. Cash has also been leaking from the business: at the interim stage, Bloomsbury had £31.1 million; yesterday it would say only that balances would be “not less than £20 million”.

The sixth, and penultimate, instalment of JK Rowling’s series, Harry Potter and the Half-Blood Princ, came out in the summer of 2005, generating sales of more than three million books in the UK. Although no publication date for the seventh and last title has been confirmed, it is expected in 2007.

Bloomsbury hinted as much, saying that it “remains confident of a satisfactory outcome” next year, when the City expects that earnings will be about £21 million.

However, the attempt to emphasise the long-term outlook is unlikely to impress traders. Shares in the £227 million company will almost certainly fall sharply this morning.

Key titles in the run-up to Christmas have been The Kite Runner, a novel set in 1970s Afghanistan by Khalid Hosseni, and, among its non-fiction list, The Blunkett Tapes, the diaries of David Blunkett, the former Cabinet minister, for which it paid an advance estimated at £400,000. However, both titles are being sold at a 40 per cent discount on the Bloomsbury website.

There have also been problems with “reference rights sales” — deals under which the company sells on the rights to the reference books that it owns to third-party publishers. Sources close to the company declined to spell out which titles were affected by this.

These deals have taken longer than expected to negotiate, although Bloomsbury insisted that they could still complete before its financial year ends on December 31. If that was the case, then profits would be “close to market expectations”, in agreements whose commercial value was greater than anticipated.

It was also suggested that the books market overall has been weak, which could prompt concern over the prospects of specialist retailers, and in particular HMV, which also sells music.

Last week Woolworths, the general high street retailer, admitted that tumbling CD sales had prompted it to issue a pre-Christmas profits warning, suggesting that the market for entertainment generally could prove to be disappointing next year.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax