HMV is rolling out the most radical redesign of its 87-year history after defying the doom and gloom on the high street with a push into video gaming and music downloads.

The high street chain – which takes its name from the famous His Master’s Voice gramophone label – said yesterday that it had decided to go ahead with a makeover of its larger stores after a successful trial in the past six months.

The “next-generation” concept will allow HMV to give more space to video games, internet hubs, download pods and children’s play areas at the expense of CDs.

Up to 15 stores will get the makeover in the coming year as part of a £50 million investment plan, including a new flagship store in Liverpool that will open in September.

The move was announced yesterday as HMV reported a 13.8 per cent rise in like-for-like sales across its stores in the UK and Ireland over the 16 weeks to April 26.

Like-for-like sales at Waterstone’s, the book chain that HMV bought a decade ago, rose 6.6 per cent.

HMV said that pretax profits for the past year were likely to come in at the top end of market forecasts, at present set at between £46 million and £58 million.

Simon Fox, chief executive, said: “We have had a terrific year and have kept the momentum we built up over Christmas. We have benefited from a strong games market but we are outperforming that market.”

He added: “In terms of DVDs, the market is up 3 per cent and we are up 20 per cent. The music market is down 9 per cent in units and we are up 7 per cent.”

The next generation format is a key part of Mr Fox’s three-year turn-around plan as HMV battles increasing competition from the supermarkets and online rivals.

Sales at the first new concept store unveiled last September in Dudley are up 25 per cent on a like-for-like basis.

HMV has also expanded into gaming and technology and the category is expected to account for a third of sales across the group’s store estate next year.

Mr Fox added that the get closer marketing campaign launched last summer – complete with a redesign of Nipper, the HMV dog – had attracted new customers.

Shares in the group, which have climbed more than 54 per cent since January, dipped 4p yesterday to 145¼p as analysts raised concerns that the recent rally meant that the stock was trading at a premium to the sector.

Christian Koefoed-Nielsen, analyst for Panmure Gordon, added that while the performance was “excellent”, long-term fears about increasing competition from online rivals remained. He said: “The outlook for the retail stores continues to be tough, and may entail substantial rationalisation and reconfiguring of the store base in due course.”

Mr Fox countered that HMV was far better positioned to take on its competitors than when he joined two years ago and was not concerned about Best Buy’s impending arrival in the UK after the American chain’s deal with Carphone Warehouse on Thursday.

“We are not seeing evidence of the downturn yet,” he said. “Clearly we are not expecting to continue to grow at this rate going forward, but we are in really good shape.”

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