NEW YORK (AP) ? Barnes & Noble Inc. said Thursday that its third-quarter loss narrowed as lower costs offset a decline in sales of traditional physical books.
Results missed analysts' expectations, sending its shares 12 percent lower in morning trading.
But the bookseller, which is investing heavily in its Nook e-readers and e-book library, sounded a positive note about the holidays so far.
Revenue in stores open at least one year, a key measure of a retailer's fiscal health, rose 10.9 percent during the three-day weekend after Thanksgiving, which is typically a bustling shopping weekend. That's good news since retailers make up to 40 percent of annual revenue during the November and December holiday period.
"Based on early sales and traffic results in stores we are encouraged by our prospects for this upcoming holiday," said CEO William Lynch.
The company launched the $249 Nook Tablet, more of a full-fledged tablet device than previous Nooks, on Nov. 7. It also sells the $199 Nook Color and $99 Nook Simple Touch reader. Barnes & Noble has been tight lipped about the exact number of devices it has sold but said sales across all Nook businesses, including digital content, hardware devices and accessories, rose 85 percent.
"We expect to sell millions of devices during our third quarter, adding to the millions of current NOOK customers," Lynch said. Barnes & Noble is competing against Amazon.com, which launched a $199 Kindle Fire tablet device and Apple Inc.'s iPad2, which starts at $499, for market share in the tablet space and the holidays are expected to be a key battlefield.
Net loss for the quarter ended Oct. 29 was $6.6 million, or 17 cents per share. That compares with a loss of $12.6 million, or 22 cents per share, a year ago.
Analysts expected earnings of 3 cents per share. Lower proxy contest and litigation related costs helped narrow the loss.
Revenue edged down less than 1 percent to $1.89 billion. Analysts expected $1.98 billion. BN.com sales rose 17 percent.
Its shares tumbled $2.10, or 12 percent, to $15.34 in morning trading.
Barnes & Noble is investing in electronic books and readers as traditional booksellers are facing tough competition from online retailers and discount stores, which forced rival Borders to liquidate earlier this year.
For the remainder of the year the company said it expects to invest heavily in activities that will help it gain more Nook users including promotions and advertising.
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