HMV UK & Ireland like-for-like sales for the 26 weeks to October 23 have slumped 16.1%, and losses have widened across the group.

Losses have widened at the group, which also operates Waterstone’s, to £41.3m, up from £24.9m in the same period in 2009.

Total sales for HMV UK & Ireland were down 15.3%. Waterstone’s total sales were down 2.4%, and like-for-likes were down 3.2%.

Chief executive Simon Fox said market conditions in the group’s first half have been “extremely difficult”. He said the changes it has made to HMV have been against a difficult backdrop of entertainment markets, particularly games, which underperformed against its expectations.

To compensate, HMV has been diversifying into new areas. In the first half new product categories grew to 12% of sales mix.

However, Fox said “our sales performance during the first half leads us to conclude that we must accelerate HMV’s product mix evolution, with a particular focus on technology, where the opportunity for range expansion in high-growth products is greatest”.

The retailer said the most challenging market in the period was games, which declined by 12% in addition to a 30% fall in the same period last year. However, it held its share of the pre-owned games marekt, with sales up 45% in the period.

In the period, HMV also agreed the disposal of its 360 Oxford Street store for £13.75m to US fashion retailer Forever 21, as revealed by Retail Week last month.

At Waterstone’s, it has been improving its range of books, supported by a centralised hub. 40% of its core range has been refreshed.

Paperchase concessions have opened in 15 stores, and it has increased its range of e-readers. Its top 20 stores, largely in ex-Borders catchments, have been refurbished.

Group total sales were £749.5m, down 6%. Like-for-likes were down 11.5%.

The group’s closing net debt of £151.6m was £63.5m higher than at October last year, primarily due to the acquisition of Mama for £47m in January.

On July 22, the group completed the refinancing of its £240m syndicated bank facility, which expires in September 2013,with an option to extend to 2014.

The retailer said the outcome of its full financial year will be largely determined by the next four weeks of the Christmas trading period, together with the final four months of its financial year, which account for 60% of full year sales.

It said despite the more encouraging trading at the beginning of the second hald, the start to Christmas has been undermined by the severe weather of the last two weeks, which has “significantly affected consumer footfall and consequently makes trading patterns hard to determine at this stage”.  

Fox said: “The increased seasonal loss reflects the tough trading conditions in HMV UK, where good progress in growing new product categories was not sufficient to offset weak entertainment markets. In Waterstone’s, the recovery plan is on track, and in all businesses we are very well prepared for the important weeks ahead, with a strong line-up of offers across all product categories and a focus on delivering high quality service both in-store and online.”