HMV, the music and video games retailer, today said it was continuing to take market share from its rivals on the high street after unveiling a 25 per cent jump in full-year pre-tax profits.

In stark contrast to the gloom across the retail sector, the group said it had yet to see any real sign of a slowdown in consumer demand.

Pre-tax profits in the year to May 3 rose from £45.2 million to £56.6 million on sales of nearly £2 billion. Like-for-like sales - takings at stores open more than a year - rose 11.4 per cent in the UK.

Simon Fox, who launched a three-year recovery drive when joining as chief executive 12 months ago, said: “I’m delighted by our performance. We had anticipated a year of stability but it’s turned into a year of growth.”

He confirmed that HMV would be rolling out a “next generation” store format to at least 15 more sites over the coming year as we as re-launching an MP3 download service and a ‘Get Closer’ social networking website for music fans.

A restructuring of the supply chain at Waterstone’s, the book store owned by HMV, is being delayed in a setback that hit the group’s shares.

HMV was down 10 per cent at 116.5p in another dismal day for retail stocks. Analysts added that investors were likely to be taking profits after the recent strong growth in the stock. It was one of the few retail shares to have gained ground in the past year - rising 15 per cent.

Freddie George, retail analyst at Seymour Pierce, said: “We advised profit taking in the stock on the announcement of its end of year trading update in May on the basis of the company’s higher rating relative to the sector.

“We remain concerned about the difficult comparatives. We also have a niggling concern that downloading will eventually impact sales of DVDs and CDs longer term.”

Mr Fox insisted he believed HMV would deliver yet more profit growth in the coming year, adding that the group was insulated from the retail slowdown by the ‘low ticket’ nature of most of the items it sold.

He added that one-in-five of all sales were now generated from video games or technology, following the Nintendo Wii-led phenomenon.

“We are quirte confident in the three year plan and the targets we laid out,” Mr Fox said. “We are not forecasting double-digit like-for-like sales growth, it will be more stable, but there will be more profit growth over the next couple of years.”

Shareholders will pick up a total dividend of 7.4p per share, level with a year ago.

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