U.K. entertainment retailer Zavvi says it has marked its first year of operations with a 10.2% like-for-like increase on the previous year for its store sales. The Zavvi group, which rebranded from Virgin Megastore in Sept. 2007 following a management buyout, also claimed a 148% like-for-like online sales increase.

However, music sales fell by 18% compared to the year up to Sept. 2007, with the high street chain blaming a weak release schedule at Christmas and summer and pressure from legal and illegal downloads. It expects the fourth quarter to show an improvement thanks to major releases from acts including Oasis, Kaiser Chiefs and Keane.

"Music sales across the industry have suffered during 2008, but the release schedule for Christmas represents one of the best release schedules for a number of years and Zavvi is in an ideal position to capitalize on this," said CEO Simon Douglas in a statement.

Games sales remain strong and account for 30% of total sales, while Blu-ray DVD has grown by 300% in the past year according to the retailer. Expansion into T-shirts and books has involved 50 stores being fitted with dedicated displays; these product areas had sales growth of 47% across the group, says Zavvi.

"We are delighted with our first year of trading." said Douglas. "We have achieved a lot and have come along way as both a business and a brand - but we are not complacent as there is still a lot to do to build on our first successful year of trading in what is becoming a challenging economic climate."

Zavvi has also added three stores to its existing chain of 112 outlets. In the past year, the retailer launched in Belfast, Camberley and Glasgow and four more launches are planned for 2008.

Douglas added: "The economic climate in the UK and Ireland will see market conditions deteriorate for retail in general, however we believe Zavvi is in a strong position due to the quality of releases across games, music and DVD, the growth of Blu-ray and our investment in new product areas such as books and T-shirts."