The company formerly known as Virgin Megastores has released strong Christmas trading figures.

During its first Christmas trading the zavvi entertainment group experienced a 10.8% increase in sales on the previous year for the 4-week trading period ending 05 January.

This sales increase do not include online sales, where there was more than 70% online sales growth.

This meant an overall margin growth of 2%.

"When you consider the downbeat assessment of the high street from certain quarters, our trading performance over Christmas is very encouraging", said zavvi MD Simon Douglas.

"Although the team has a rich history in entertainment retail, there’s no getting away from the fact that zavvi is the newest kid on the block as far as customers are concerned so to perform as well as we have during such an important trading period has to be taken as a huge positive", he continued.

In the sales breakdown, Games sales grew by 62.7% on a like-for-like basis during Christmas despite the short supply of this year’s must-have gifts, the Nintendo Wii and DS.

DVD sales grew 6.4% like-for-like on the back of a strong growth during Christmas 2006. However, in its statement, zavvi added: "continuing price deflation on chart and new release offset significant growth experience on range and box sets".

However, it added that the growth demonstrated by Blu-ray and HD, where zavvi’s market share peaked at 15.8pc, is positive for the future.

This, it said, was partly fuelled by the reduction in price of HD players and the growing install base of PS3.

Music sales were, however, down 11.6% on a like-for-like basis as a result of "a weak release schedule and price deflation effecting chart sales".

zavvi says that this year’s outlook for music looks more positive with the likes of Oasis, Madonna, Coldplay, U2, Kasabian and Razorlight scheduled for 2008 releases.

The company's ranges of books, clothing and digital hardware saw a positive 45.2% increase "reflecting an greater focus in these areas".

In 2008, zavvi is planning on opening new stories in Belfast, Camberley, Bristol and Liverpool, as is to rebrand its current shops with new window and in-store displays.

It is also to relaunch its website.

Douglas concluded: "For a business that launched on 14 September with a brand new name, Christmas trading has been excellent".