HMV, the music, DVDs and books retailer, today reported a half-year pre-tax loss of £24.9 million, dragged down by weak sales at Waterstone's, its book franchise.

The high street retailing group said that it continued to operate in “challenging and highly competitive markets”, with the book market proving particularly tough.

Like-for-like sales at Waterstone's were down 5.1 per cent on last year.

The group said that although some competitors had struggled, the total consumer book market was down only 0.5 per cent from last year, "reflecting continued market share gains by competitors".

The recent administration of Borders UK could benefit the group, it added.

Overall losses were marginally less than forecast.

Like-for-like sales by HMV UK & Ireland were up 1.6 per cent, leaving like-for-like sales across the business down by only 2.1 per cent.

Revenues were up by 5.4 per cent from last year at £797 million.

Simon Fox, chief executive, said: “With a good line-up of products across all categories, our stores and websites are very well prepared for Christmas and we are confident that customers will receive great service and availability however they choose to shop.”

Like other high street stores, HMV has struggled against competition from online retailers such as Amazon.

However, it has in turn benefited from the collapse of Zavvi, from which it has now bought 32 stores, seven of them in the past six months, and Woolworths.

In a statement, the group said: “Over a three-year period, [our] plan is to protect and revitalise our retail stores, grow revenue from new channels and drive cost efficiency.”

Net debt increased in the half year by £14.5 million and is now £88 million, which HMV said was due to its acquisiton of 7digital. It bought bought a 50 per stake of the digital music group for £7.7 million in September.

HMV made no mention of its intentions for Mama, the live music and management business, in which it bought an 8.2 per cent stake last night.

It already had a 50 per cent stake in 11 Mama venues, including the Jazz Café, in London, and Moshulu in Aberdeen, and has said that it is “considering its position” in relation to a full bid.

Mama, which represents artists including Franz Ferdinand and Kaiser Chiefs, rejected two bids from Silvio Scaglia, an Italian entrepreneur and its biggest individual shareholder, earlier this week.

HMV’s board has recommended an interim dividend of 1.8p a share and will release a Christmas trading update on 14 January.

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