HMV Group, the music, DVD, games and books retailer, said underlying sales had continued to grow but at a slower rate as economic conditions worsened.

"In what is, undoubtedly, a tough consumer environment, the solid start made by the group to the new financial year means that our plans are in line with the board's expectations, and I remain confident that our strategic initiatives are on track," said chief executive officer Simon Fox in a statement published ahead of the group's annual shareholders' meeting.

HMV, which is one year into a three-year turnaround plan, said it is like-for-like sales for the 18 weeks to August 30 increased 1.3 per cent.

This was broadly in line with analysts' expectations but a slowdown from growth of 10.1 per cent in the previous quarter.

The outcome was driven by like-for-like sales growth of 4.3 per cent in HMV UK and Ireland, with market share gains in all categories, and growth of 2.9 per cent in HMV International.

However, it was held back by a 4.3 per cent fall in like-for-like sales at the Waterstone's book chain, reflecting a weaker book market and tough comparative numbers.

HMV said gross margins, a measure of profitability, were in line with previous guidance.

The stock has risen 11 per cent over the past year, outperforming the FTSE Allshare Index .FTASX5370 by 45 per cent.

HMV Group plc is engaged in the retailing of pre-recorded music, video and electronic games under the HMV and Fopp brands, and the retailing of books under the Waterstone's brand.

The company has operations in seven countries, with the principal markets being those of the UK and Canada. HMV operates from 379 stores and online in the UK and Ireland, Canada, Hong Kong and Singapore.

The company's subsidiaries include HMV Music Ltd, HMV (IP) Ltd, HMV Canada Inc, HMV USA LP, HMV Hong Kong Ltd and HMV Singapore Pte Ltd.