HMV said its UK and Ireland sales slumped nearly 15% after the World Cup slowed the pipeline of new releases, and the gaming market remained weak.
Despite the drop in like-for-like sales for the 19 weeks to September 4, the entertainment products retailer said its stores were in good shape ahead of the peak Christmas season.
In a turnaround launched by chief executive Simon Fox, HMV has pushed into fashion, mobile phones, and Blu-ray discs, while its swoop for festivals and gig venue owner MAMA Group cemented its position in the fast-growing live market.
Like-for-like sales at its wholly-owned music venues were up by 8% in the period, but festivals were below expectations due to disappointing attendance at the inaugural High Voltage event at Victoria Park in London.
HMV also reported signs of turnaround at its Waterstone's book business, after a 2.6% drop in like-for-like sales bettered city expectations.
The firm has addressed supply chain problems, and is refocusing stores on local customer demand and the chain's specialist market position.
HMV is reportedly under pressure from shareholders to sell the business amid speculation that founder Tim Waterstone may want to take it private.
Mr Fox said all parts of HMV's strategic plan, including the turnaround of Waterstone's, were on track.
“These initiatives, combined with a stronger product line-up, particularly in games, are key to the delivery of a successful Christmas,” he added.
Numis Securities said the big disappointment in the trading update came from the DVD category with a fall in like-for-like sales of 15%, due partly |to below-cost selling by supermarkets. Music sales were 8% lower while games fell 15%.
Analyst Andrew Wade added: “Even factoring in the previously flagged disruption from the World Cup, HMV |traded poorly through the first quarter, with like-for-like sales considerably worse than we had expected.”