Shares in HMV dived over 20 per cent on the FTSE All Share in morning trading after the retailer said it had nearly doubled its losses and net debt in the half year ended 23 October.
The retailer said that total sales fell six per cent from the same period last year to £749.5 million, while like for like sales dropped 11.5 per cent.
In Britain and Ireland total sales at its HMV stores declined 15.3 per cent, with like for like sales down 16.1 per cent.
Total sales at the group's Waterstone's stores fell 2.4 per cent and like for like sales declined 3.2 per cent.
Overall the group reported a loss after tax of £30.5 million, almost double the loss of £17.8 million reported in the same period last year.
While losses mounted, so did net debt, rising from £88.1 million to £151.6 million. The group also said it would be disposing of its Oxford Street store for £13.75 million.
Given its performance, HMV said it would be cutting its interim dividend from 1.8 pence per share to 0.9 pence per share.
The group added that its full year performance would be largely determined by the next four weeks of Christmas trading, with 60 per cent of full year sales usually being accounted for by Christmas shoppers. However the group said that so far the Christmas period has been undermined by poor weather, thus cutting consumer footfall at its stores.
Simon Fox, Chief Executive of HMV, said, "The increased seasonal loss reflects the tough trading conditions in HMV UK, where good progress in growing new product categories was not sufficient to offset weak entertainment markets. In Waterstone's, the recovery plan is on track, and in all businesses we are very well prepared for the important weeks ahead, with a strong line-up of offers across all product categories and a focus on delivering high quality service both in-store and online."
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers, commented, "These results do little to ease fears that HMV is slowly being consigned to the history books. The group's products are made for the internet, whilst the supermarket operators continue to utilise entertainment products as shop window offerings - with many probably acting as loss leaders in order to attract customers.
"Furthermore, moves to diversify the product offering smack of desperation, with competition in clothing and electrical products already hugely intense.
"In all, despite some investor hopes that the group will benefit from being 'the last man standing' on the high street, the supermarkets may well claim this prize, with HMV now paying the price for failing to embrace the internet much sooner. For now, market consensus opinion currently denotes a weak hold, although this looks likely to come under further pressure following today's results."
By 09:55 shares in HMV were down 22.86 per cent on the FTSE All Share to 33.75 pence per share.