HMV today revealed that like-for-like sales have slowed in the run up to Christmas as the music and book retailer revealed a marginal reduction in first-half losses.

Like-for-like trading, which strips out gains from new stores opened during the period, slowed from 5.8 per cent in first 18 weeks of its financial year to 5 per cent for the 26 weeks ended October 27.

Total sales declined from 12.2 per cent growth in the first four and a half months of the year to 9.5 per cent at the end of six months.

Nevertheless, HMV was upbeat about both the interim results and the outlook.

Simon Fox, HMV's chief executive, said today: "The group's first half was driven in particular by like-for-like sales growth in HMV UK and Ireland, where we are successfully exploiting the high growth games and technology categories and increasing our share of music and DVD.

"At this stage, the most important days and weeks of our financial calendar are still ahead of us, and our stores and websites are very well prepared for Christmas."

Like-for-like sales at HMV's UK and Ireland-based stores rose by 9.2 per cent while comparable trading increased by 1.4 per cent based on sales of the final book in JK Rowling's Harry Potter series.

During the first half of the year, pre-tax losses narrowed by 3.4 per cent to £28.7 million. Including the £49.2 million in proceeds from the sale of its Japanese business, HMV reported a £25.9 million pre-tax profit.

Mr Fox said that the company was continuing to focus on boosting sales in games and technology sector although there appeared to be growth in the DVD market, with interim trading up 12 per cent.

Technology product sales, including MP3 players, soared 120 per cent, while gaming goods, such as Nintendo Wii's console, increased revenues by 80 per cent.

The Wii is proving the most popular games console with Need For Speed and Fifa '08 topping the games chart. Leona Lewis's album Spirit and Led Zeppelin albums lead CD sales, while The Simpsons, Bourne Ultimatum and Transformers are the top DVDs.

A statement on Christmas trading will be announced on January 17.

The move towards the high-tech and gaming and away from a declining CD market is part of Mr Fox's three-year turnaround plan, announced in March.

As part of the revival strategy, HMV aims to transform its traditional music retail business into "interactive" stores including "refreshment hubs" and multi-player gaming areas.

The first two new stores opened in Tunbridge Wells and Merry Hill in September, with a further four scheduled to open next year including two at Heathrow Terminal Five due to open in March 2008.

Mr Fox said: "We're pleased with what we've seen so far, especially the performance of games and technology. Customer research has been extremely positive."

He added a decision on further roll-out of the new stores would be made after Christmas. However, Mr Fox insisted they were "absolutely not giving up on music".

Overall sales have been hampered by lower sales in Canada, which has only seen 2 to 3 per cent growth. However, Mr Fox said they had no intention of selling the Canadian arm, following the sale of HMV Japan.

Mr Fox attributed sluggish growth in Canada to cross-border sales in America thanks to a beneficial exchange rate. He said: "One in six Canadians are crossing the boarder. The price differences are quite marked. But recently this has changed with an interest rate change."

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