New Zealand's home entertainment market leader the Warehouse has been hit by a slump in music and DVD sales.

The mass merchant revealed 2.3% decline in full year-earnings to $83.2 million New Zealand ($68 million) for the year ending Aug. 2.

The profit slump has been blamed in part to shrinking sales in the New Zealand music and DVD market, which according to the Warehouse is down 15% in total.

Chief executive Ian Morrice declined to talk to in detail about the music and DVD performance, citing commercial sensitivities.

However, in a conference call with analysts, he said Warehouse music and DVD sales were down $13 million New Zealand ($9.5 million) as consumers continue to move to the online environment. Although the Warehouse was actually growing market share, Morrice said that the fall in the revenue also reflected the lower average selling price for music and DVD, and he expected that trend to continue.

To offset falls in like home entertainment, the Warehouse will be stepping up its activities in other product categories such as books and sporting and leisure goods, as well expanding its own online home-shopping offering.