Music and book retailer HMV has posted a fall in profits after struggling to compete with supermarkets and online rivals.
In a statement the company revealed that its pre-tax profit before exceptional items slumped to £48.1 million in the 12 months to April 28th, down from £98.2 million a year ago.
The profit drop came despite a 3.8 per cent increase in sales, which reached £1.9 billion in the eight weeks to June 23rd.
HMV, which is attempting to respond to the growing trend for consumers to turn to the internet to download music and purchase goods, said that market shifts had been "more severe than predicted" over the year.
The company said that while physical music sales on the high street remained "under the greatest pressure" pricing initiatives implemented by its HMV music chain in the UK and Ireland had helped to reverse the earlier loss of market share from its stores.
In both music and across the Waterstone's book chain the retailer boosted its online businesses in order to meet the desire of consumers to shop on the internet, but HMV warned that the action had been "insufficient to offset the pace and scale of underlying decline".
Nonetheless HMV, which completed an acquisition of the Ottakar's book store brand during the year, insisted that a recovery plan announced by the company in March was beginning to bear fruit.
As part of a three-year plan HMV is planning to cut costs by streamlining supply chains, with the hope that efficiency measures will result in cost savings of £40 million a year in 2010.
The entertainment group is also hoping to boost its core retail business by offering a broader range of products, such as MP3 players, in its HMV stores and wants to increase sales through new channels - including through a new social networking website.
Commenting, HMV chief executive Simon Fox said: "The turnaround plan we announced in March is progressing well and we are on track.
"The benefits of our actions are beginning to come through and are reflected in the good start we have made to our new financial year," he stressed.