British music and books retailer HMV Group Plc said on Thursday it was confident profits for the full year would be in line with restated analyst expectations despite an extremely tough market.

The group, which issued a profit warning in March due to competition from supermarkets and the Internet, said it had struggled during recent weekends as hot weather kept shoppers off the high street.

But HMV's chief executive Simon Fox said he was hopeful new releases such as the CD by the Arctic Monkeys and the last Harry Potter book would help sales.

The news sent its shares up 1.7% to 118 pence at 0710 GMT.

"The markets in which the group operates have continued to be extremely tough," Fox said in a statement.

"However ... I am confident that the initiatives we are putting in place to reduce our costs, revitalise our core business and grow our revenues are being pursued at pace and will lead to a turnaround of the group's performance."

HMV, which runs Waterstone's bookstores as well as music shops under its own name, is battling cut price competition from supermarkets and online retailers as well as a decline in physical music markets as downloading takes hold.

It announced the details of its three-year turnaround plan in March which will focus on "interactive" HMV stores and Fox said on Thursday there was great momentum within the company to make these changes happen.

The group said the market was forecasting a profit for the year to end-April at about £48 million ($95.62 million).

Fox also said a good start had been made to the cost-saving programme, including the disposal in the calendar year to date of eight Waterstone's stores.

On Thursday it said total group sales for the full year fell by 2% at constant exchange rates, including a 3.5%decline in stores open for more than a year.

Group sales on a like-for-like basis fell 3.9% in the last 16 weeks to April 28, pulled down by HMV stores in the UK and Ireland which recorded a 2% fall in that period and Waterstone's which fell 7.3%.

"The overall book market has also slowed since December which has resulted in tough trading conditions for Waterstone's," he said.

But Fox told reporters on a conference call that sales for its online HMV.co.uk continued to grow by 150% over the last 16 week period and it expected to see good growth from the new Waterstones.com which launched in September.

Under the turnaround plan, shoppers will be able to log on to a new social networking site for music, film and games enthusiasts with content provided by Universal Music and 20th Century Fox.

They will also be able to burn their own CDs and pay to play on the latest games consoles. It will launch the "store of the future" trials in two shops this summer and if successful will role out across the country after Christmas.

Seymour Pierce analyst Andrew Wade said he was keeping the stock as hold because "unless things get horrendously worse then the only way is up".

"The cost savings ... should be relatively straight forward to achieve," he said. "There is certainly scope give the size of the savings and cautious mood of management for these to come in ahead of expectations."

The company did not give any update on its review of its Japanese business which could be sold.