Harry Potter weaves his magic on HMV sales

HMV has received a timely boost over the summer as the bad weather triggered a surge in DVD sales and the new Harry Potter title drove a strong performance across its Waterstone's stores.

Simon Fox, the chief executive, unveiled a new strategy for the struggling retailer this year based on a redesigning its stores to reflect the changing behaviour of consumers. With more people downloading music on to mobile phones or portable music players like Apple's iPod, HMV has moved to create space within its stores for customers to log on to social networking sites, while downloading music from the HMV site, a plan designed to stimulate digital sales to offset declining CD revenue and to tempt people into spending more time in the company's flagship music stores.

Before the opening of its first redesigned store in Birmingham this weekend, HMV has reported an unexpectedly strong trading performance over the summer. In the 18 weeks to the end of August, HMV recorded sales growth of more than 12 per cent, with like-for-like sales up almost 6 per cent. In the UK and Ireland, sales rose nearly 13 per cent with like-for-like sales of nearly 10 per cent.

The sales surge was driven by a 20 per cent increase in DVD sales as well as the continued strength of the video games market. Mr Fox said the spike in DVD sales was triggered by the bad weather across the UK this summer as most of the sales were of back catalogue movies, rather than much sought-after new hit movies.

More predictably, the other big growth driver this summer was the release of Harry Potter and the Deathly Hallows, the seventh instalment in the series. That one title pushed HMV's book sales nearly 3 per cent higher, with more than half a million copies sold through Waterstone's – 200 per cent more than the previous title. The company's book sales were flat, excluding the Harry Potter sales.

The performance is in contrast to other high street entertainment retailers, with a spate of CD and DVD retailers, including Fopp and ChoicesUK, entering administration over recent months. Mr Fox said it was "far too early" to call the trading improvement a recovery, but he was optimistic the company would enjoy a good Christmas.

In the DVD market, he said a spate of blockbuster releases – including the new Shrek and Spider-Man films, Transformers and The Simpsons Movie – would drive sales of DVDs over the rest of the year, while recent cuts to the cost of some games consoles will likely boost video game sales.