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Nook Sales Are Flat

By JULIE BOSMAN

12:10 a.m. | Updated Add another happy beneficiary of the publishing powerhouse “Fifty Shades of Grey”: Barnes & Noble.

Sales of the erotic trilogy, which has dominated paperback and e-book best-seller lists for most of the year, along with the liquidation of the Borders chain in 2011, helped lift comparable bookstore sales in the fiscal first quarter at Barnes & Noble by 4.6 percent, the company said on Tuesday.

Barnes & Noble, the nation's largest bookstore chain, reported narrowing losses of $41 million, or 78 cents a share, in the three months that ended July 28, compared with $56.6 million, or 99 cents a share, in the same period a year ago. Revenue g rew 2.5 percent, to $1.45 billion.

Nook sales, at $192 million, remained flat from the year before. Sales of digital content, which include books, newspapers, magazines and apps, increased 46 percent. Total college bookstore sales increased slightly to $221 million.

The company has poured money into its Nook business in order to compete with Amazon, Apple and other rivals in the crowded e-book market. Last week, it dropped the prices for its color tablets.

“During the first quarter, we continued to see improvement in both our rapidly growing Nook business, which saw digital content sales increase 46 percent during the quarter, and at our bookstores, which continue to benefit from market consolidation and strong sales of the ‘Fifty Shades' series,” William Lynch, the chief executive of Barnes & Noble, said in a statement.

Analysts said they had hoped Barnes & Noble would be able to narrow its losses in the Nook busi ness, particularly with increasingly heated competition in the tablet space this fall. Barnes & Noble is expected to introduce another new tablet in the coming months.

“On the positive side, the digital content is still growing pretty quickly, which means that either the overall end market is growing or they're taking share, which is encouraging,” Peter Wahlstrom, a senior analyst with Morningstar Equity Research, said in an interview.

To become profitable on the digital side, he said, Barnes & Noble needs to increase its scale and distribution.

On Monday, Barnes & Noble made a long-awaited announcement that it would expand its Nook business into Britain beginning in October.

On a conference call with reporters and analysts on Tuesday, Mr. Lynch said that the bookseller was hampered by an inability to meet production demand for a new e-reader introduced in the quarter, the Nook Simple Touch with Glowlight. Only in the last two weeks, he said, has Barnes & Noble been able to keep the devices in stock at retailers like Walmart.

“We felt that there was a missed opportunity on the Glowlight supply issues,” Mr. Lynch said, adding that the company could have sold more devices if the problems had not occurred.

On Monday, Barnes & Noble made a long-awaited announcement that it would expand its Nook business into Britain beginning in October. Microsoft has agreed to invest up to $605 million in Barnes & Noble's Nook division and college bookstores. Mr. Lynch said on Tuesday that the company is “extremely focused” on closing the transaction with Microsoft sometime this fall.