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Last Updated: Wednesday, 20 December 2006, 07:58 GMT
'Difficult' market weighs on HMV
HMV store
While store sales have fallen, HMV's online operations have improved
Entertainment retailer HMV has warned that tough trading conditions mean its annual profits are set to come in at the bottom end of forecasts.

It added that while efforts to improve sales are "working effectively", group like-for-like sales fell 1.3% in the 12 weeks to 28 September.

Like-for-like sales - which exclude new stores - at its bookseller Waterstone's also fell 3.7% during the period.

HMV warned that conditions would remain "difficult" for the rest of the year.

"We now expect full year profits to be towards the bottom of the range of market expectations," HMV said in a statement.

Online growth

The group blamed a decline in the overall value of the UK DVD and music markets for some of its current troubles.

We recognise that we face very tough and rapidly-changing markets and have to work hard to offset this
Simon Fox, HMV chief executive

According to HMV, the total value of the UK music market, including digital downloading, fell 14% between October and November.

The company said its international businesses had increased market share in both music and DVD, but added that like-for-like sales at HMV Asia fell 3.8% while HMV Canada's sales dropped 3.4%.

"We recognise that we face very tough and rapidly-changing markets and have to work hard to offset this," said chief executive Simon Fox.

I'm not getting into debt over Christmas
Martje Ross

However, the group's online businesses did offer some more positive news.

Sales at were up 200% on the same period on last year while had made "good progress" since its launch on 28 September.

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