Barnes & Noble returned to a profit in the fiscal second quarter as it invested less in its Nook e-book reader and cost cuts offset lower sales.
Its sales missed expectations, however, and its shares dropped more than 3 percent in premarket trading. The report comes as the crucial holiday season kicks off, when retailers can make up to 40 percent of their annual revenue.
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"Our booksellers are prepared to welcome holiday shoppers and recommend thoughtful gift ideas for everyone on their list," said Michael P. Huseby, president of Barnes & Noble and CEO of Nook Media.
The company has spent heavily on building up its Nook e-book reader and digital library, but it has scaled back amid tough competition from Amazon's Kindle and the Apple iPad. It has been reviewing its strategy since CEO William Lynch departed in June and the company did not name a replacement. It introduced a new non-tablet e-book reader, a $119 Nook GlowLight, for the holidays.
Net income for the three months ended Oct. 26 totaled $13.2 million, or 15 cents per share. That compares with a loss of $501,000, or 7 cents per share, last year.
Revenue fell 8 percent to $1.73 billion from $1.88 billion last year. Analysts expected a loss of 3 cents per share on revenue of $1.76 billion, according to FactSet.
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Revenue fell across all segments. Retail revenue fell nearly 8 percent to $921 million. College bookstore revenue fell 4.6 percent to $737.5 million and Nook revenue dropped 32 percent to $108.7 million.
Shares fell 58 cents, or 3.5 percent, to $15.85 in premarket trading 15 minutes before that market opened. The stock is up 9 percent since the beginning of the year.
