Waterstone's owner HMV today said the book market had come under strain as it bore the brunt of a downturn in consumer spending.
The high street bookseller saw its like-for-like sales drop 3.1 per cent in the 26 weeks to 25 October. The comparison showed a 1.4 per cent fall when adjusted for the impact of Harry Potter and the Deathly Hallows on last year's result.
HMV said its markets had deteriorated since the end of October in line with a general downturn in consumer confidence. It added the book market has seen a "marked deterioration" in the five weeks to November 29.
Waterstone's operating loss before exceptional items increased in the first half year to £9.3 million from £8.9 million in 2007.
HMV said the book market as a whole contracted 5 per cent during the period and had been particularly hit by poor performance in the non-fiction category. Like-for-like sales at the HMV music chain were ahead 1.6 per cent, with operating losses over the seasonal quieter trading period narrowing by £400,000 to £12.7 million.
Losses before tax for the group were £27.5 million, against £28.7 million a year earlier.
Shares were 8 per cent lower as analysts downgraded profit forecasts in the wake of today's half-year update. Seymour Pierce stockbrokers said it now expected pre-tax profits of £58 million, compared with £65 million previously.
HMV chief executive Simon Fox said the book market as a whole had been hit by a downturn in spending on big celebrity hardback books, which are usually a key part of Christmas trade.
"I would say the number of titles and quality of titles is the same year on year.
"But rate of sale is lower than last year and lower than we would want them to be. They are clearly a discretionary spend."
He said JK Rowling's recently released book, The Tales of Beedle the Bard, was the last major title launched before Christmas.
Mr Fox said the collapse of Woolworths, which had a 10 per cent share of the entertainment market, would cause relatively little disruption to Christmas trading across the HMV group.
Woolworths launched a closing down sale today after administrators failed to find a buyer for all or part of its retail business.
Mr Fox said Woolworths stores would not replenish their stock, so would not be able to compete with retailers that were able to offer new releases.