HMV has beaten the high street gloom with a 7.3 per cent uplift in like-for-like sales over the year.
Higher games and DVD sales helped the music and video retailer to post positive like-for-likes, after a decline last year.
Sales of games now make up 21 per cent of HMV UK and Ireland's sales mix and sales volumes of DVDs increased by 18 per cent, the retailer said.
The improved performance, along with the sale of HMV Japan, helped the retailer achieve a 25 per cent increase in profit before tax of £56.6 million for the 52 weeks ended April 26th 2008.
The group sold HMV Japan for £70.6 million, helping the group pay off its debts.
Chief executive Simon Fox said: "One year into our transformation plan, group profits are up by 25 per cent and we are ahead of where we expected to be.
"We still have much to do, and while we are mindful of the challenging economic outlook, the current financial year has started in line with our expectations and I remain confident that we are building a better and stronger business that can prosper in a rapidly-changing market."
The group's chairman, Carl Symon, said as a result of the progress made he will be stepping down in September.
"As the foundations are firmly in place, it is an ideal time for me to pursue new interests," he said in a statement.
The board is looking for a replacement, Mr Symon added.
HMV, a mainstay of the British high street, has seen some turbulent years as music downloads and competition from supermarkets undermined the group's sales.
The group brought in Mr Symon, formally a senior executive at IBM, as chairman in 2006 to turn the business around.
Stores were revamped and prices slashed in an effort to bring back consumers.