The group, which runs the same-name music and games stores as well as the Waterstone's book chain, said its turnaround plan was ahead of schedule as same-store sales growth at its UK and Ireland HMV stores was even further ahead at 11.4%.

Total group sales in the 12 months to April 28 were up 10.3% on the year before, with a 4.7% improvement for Waterstone's.

In a trading update, management said they were confident that underlying pre-tax profits for the year would be towards the upper end of expectations.

In the previous year, the group - which operates around 700 stores in the UK and Ireland - saw like-for-like sales dip 3.5% as sales struggled amid tough high street and digital competition.

Chief executive Simon Fox launched a revival plan at the beginning of 2007, which included store revamps, a focus on big-selling games and consoles, and a digital music and online push.

He said today: "As we complete the first full year of our three-year turnaround plan, we are ahead of where we expected to be."

HMV Group was one of the big winners over Christmas, with bumper sales of games, consoles and million-selling DVDs such as Simpsons The Movie and the Bourne Ultimatum helping boost turnover to record levels.

Like-for-like sales for the five weeks to January 5 were 9.4% ahead.

For the 16 weeks to April 26, the group's sales growth improved further, with like-for sales 10.1% ahead.

Mr Fox said the growth was driven by a strong games market, especially thanks to the Nintendo Wii console.

He said: "HMV has clearly benefited from a strong games market, however we have continued to outpace this fast growing market."

Mr Fox said the group was also planning another five new-look "next generation" stores this year on top of the four already launched.

They feature new zones such as download stations and smoothie bars and have been trading "very successfully", according to HMV.

Two of the new sites include Liverpool and London's White City, with the Liverpool outlet set to cover 15,000 square feet, which will make it the group's biggest store for 10 years.

Another 10 to 15 existing stores are also scheduled to be refitted into the new format this financial year.

The chief executive added that there was a strong release schedule coming up for music including albums from Coldplay, Paul Weller and The Fratellis, while he said the recent launch of top-selling game titles like Grand Theft Auto IV would boost gaming revenues this year.

Waterstone's should also benefit from the new James Bond adventure "Devil May Care" written by Birdsong author Sebastian Faulks, Mr Fox said.

HMV's underlying pre-tax profits came in at £48.1 million for the year to April 2007. The group said they were likely to come in towards the £58 million mark for the current financial year.

Shares were nearly 5% ahead today.