HMV is having a tough time on the UK's High Streets

HMV said like-for-like sales in the five weeks to 7 January fell 2.7%, down from a 6.4% rise a year ago, led by a 5.5% sales drop at its core HMV stores.

Pre-tax profits fell to �0.2m ($0.35m) for the 26 weeks to 29 October, down from �10.5m last year.

Chief executive Alan Giles, 51, said he would retire in December.

Mr Giles said he was stepping down from the firm to develop non-executive directorships.

In morning trade, HMV shares were down 18.5 pence, or 9.39%, at 178.5p.

Competitive pressures

Profit margins in the UK were hit following increased levels of price cutting compared with last year, the company said.

The competitive pressures faced by our UK businesses made trading very difficult during the autumn period Alan Giles, HMV chief executive See HMV's share price

HMV makes about 90% of its profits in the second half of its financial year, which includes the key Christmas period.

"The competitive pressures faced by our UK businesses made trading very difficult during the autumn period," said Mr Giles.

"Trading in the UK was in contrast to our international HMV businesses, which continued to perform very strongly."

At HMV's Waterstone's chain of bookshops, like-for-like sales fell 2.4% over the festive trading period.

Meanwhile, HMV's bid target, bookseller Ottakar's, reported flat Christmas sales in the four weeks to 7 January and warned it expected conditions to remain challenging for the rest of the year.