Britain's love affair with the Nintendo Wii video game console prompted a fall in sales of traditional toys over the Christmas period at one of the high street's biggest names.

Argos yesterday said that gaming and technology products dominated its list of bestsellers over the festive period. It took more than £4 million-worth of telephone and internet orders for the Wii console on November 30 alone.

Terry Duddy, chief executive of Home Retail Group, the owner of Argos, said that the Wii phenomenon had moved video games into the family entertainment sector.

Mr Duddy said: “We could have gone on selling everything Nintendo supplied. It wasn't a great Christmas for toys but games were up 40 per cent year on year. Parents were happy to buy a Wii and put it in the front room for their kids.”

The success of the Wii has already seen Game Group emerge as one of the winners on the high street over Christmas and the console also helped HMV to report record festive sales.

But the rise of the video game came as Argos continued to suffer a fall in demand for former big-sellers such as video recorders, stereos and fixed-line telephones.

Sales of stereos and hi-fi systems were down 30 per cent year on year. Mr Duddy said the video recorder was almost certain to disappear from the Argos catalogue.

Argos limited the fall in overall like-for-like sales to 0.2 per cent during the 18 weeks to January 5. Total sales were up 2.5 per cent to £1.9billion and margins were flat.

Home Retail said it expected to post pre-tax profits at the top end of expectations despite further pain at Homebase, its DIY chain, where like-for-like sales fell 6.3 per cent on continued weak demand for kitchens and bathrooms.

Mr Duddy said that group profits for the year to March should be up to £15 million higher than forecast in the City. He predicted £430million to £435million, a rise of about 15 per cent on the previous year.

He did, however, join the growing number of retailers worried about a slowdown in spending. “Thankfully shoppers came out for the key Christmas period but it is obvious that sales growth will be harder to come by,” MrDuddy said.

“I don't know about a recession. It feels to me like the downturn we had in 2005 when prior to that there were five interest rates increases a row.

“It feels similar to then, so a change in interest rates would be helpful. I'd love one, absolutely. The bigger and the quicker the better.”

His cautious outlook saw shares in the group close down 5p at 266p despite a rise in early trading. The shares are 35 per cent below levels seen a year ago.

Assad Malic, retail analyst at Credit Suisse, trimmed his profit forecasts for 2009. “The like-for-like performance at Homebase was disappointing with consistent declines across most categories,” Mr Malic said.

Argos said the internet accounted for 23 per cent of sales over the festive period with a growing number of customers collecting their goods from the stores.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive