HMV profit more than halves as price war rages

Music and books retailer HMV said its annual profit more than halved to £48.1 million as it battled cut-price supermarket and online sales.

The group, which runs Waterstone's bookstores as well as music shops under its own name, is battling price competition from supermarkets and online retailers as well as a decline in physical music markets as downloading takes hold.

The group said pretax profit before exceptional items for the year to April 28 plunged to £48.1 million from £98.2 million the year before. Sales rose 3.8 per cent to £1.895 billion.

A poll of 18 analysts forecast median annual profit of £49.7 million, while 17 forecast revenue of £1.9 billion for the group which issued a profit warning in March but said last month it expected earnings to be in line with revised forecasts.