Virgin Megastores prospers as DVD sales outstrip CDs

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More shoppers bought DVDs than CDs for the first time over Christmas, Virgin Megastores said yesterday.

The retailer hailed the "box set", which proved a more popular Christmas present than the string of "Best of" compilations released by most record labels.

Despite the gloom elsewhere in the entertainment sector, Virgin Megastores reported a 4.6 per cent increase in like-for-like sales during the four weeks to 30 December. Total sales rose 8.4 per cent, buoyed by investment in new stores.

Simon Douglas, the managing director, said: "It's been a tough year for entertainment generally and music specifically. Both the specialist and indie sector have faced heavy competition from the supermarkets."

He added: "The growth of internet continues to provide strong competition with customers enjoying both extensive choice and attractive pricing."

Virgin's performance contrasts with that of two of its rivals. HMV, which also owns the Waterstone's book chain, issued a profit warning before Christmas and Music Zone went bust.

Mr Douglas said DVD became the dominant format for the group, "eclipsing music for the first time in its trading history". DVD sales rose by 24.1 per cent on an underlying basis, increasing the group's share of that market by 0.7 per cent. Popular gifts included 24, series five, and Lost, the complete second series. Music sales fell compared to the previous year mainly due to price deflation and "bland" releases, Mr Douglas said. But Virgin increased its market share by 0.9 percentage points in this area. Games sales shot 19.2 per cent higher on a like-for-like basis. The group said its online site grew sales by 191 per cent.

Elsewhere on the high street, Conran Holdings, home to the luxury Conran homewares stores, provided further evidence that retailers at the top end of the market prospered over Christmas. Underlying sales in December at the group's two London stores rose by 16 per cent on the previous year, the company said yesterday. Trading at The Conran Shop's stores in Paris, New York and Japan was also strong. Conran Restaurants, controlled by Conran Holdings, reported a 12 per cent like-for-like sales rise over the period.