Group sales for the five weeks to January 5 climbed 9.9 per cent and 9.4 on a like-for-like basis.
Total sales at HMV in the UK and Ireland jumped 16.1 per cent and 14.1 per cent like for like, driven by strong sales across all product categories. Gross margins were maintained.
Waterstone's sales rose 0.5 per cent and 4 per cent on a like-for-like basis, with gross margin lifted by 30 basis points.
The retailer is part way through a three year plan to turn the business around after being hit by falling profits in the face of competition from supermarkets and online retailers.
The international division fared less well, with total sales up 2.3 per cent, equating to a 0.6 per cent like-for-like drop.
HMV said its turnaround strategy – including focusing the product mix on higher growth games and technology at the HMV chain – was “progressing according to plan”.
Waterstone’s and HMV’s online businesses continue to “deliver rapid sales growth” and HMV’s next-generation store trials have provided the basis for a roll out, it added.
The retailer said it expects profit before tax in the year to April 2008 to be towards the upper end of market expectations, which are in the range of£43 million to£53 million.
HMV chief executive Simon Fox said that Christmas had been “highly successful”.
He added: “Having stabilised the business, we will continue to focus on revitalising our store propositions, as well as growing new channels to market and carefully managing margins and costs. The group is, therefore, well-positioned for the next phase of its turnaround."