Barnes & Noble's Nook revenue up 140 percent

Barnes & Noble's traditional business model is lagging, but its digital focus has helped buoy its financial performance, the company said today.

During its fiscal first quarter that ended July 30, B&N generated $1.4 billion in sales, representing a 2 percent increase over the same period last year. Its slight revenue increase becomes more impressive when one considers that the core of its operation--book sales in stores--were down during the period. In fact, the company reported that store sales decreased 3 percent year over year to $1 billion.

However, the company's Nook operation, led by its Nook Color, changed everything for Barnes & Noble. The company reported that its Nook business, which includes hardware and digital-content sales, grew 140 percent during the period to $277 million.

The Nook and Nook Color have quickly gained the respect of consumers worldwide. The Nook Color, which costs $249, runs Android and offers an application store, in addition to e-book support. The Nook is an e-reader that costs $139.

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That pricing, combined with device features, have helped the Nook gain high marks among critics and consumers, alike. In fact, earlier this year, CNET dubbed the Nook "best overall e-ink reader." The Nook Color earned "best sub-$250 color e-reader."

However, Barnes & Noble's hardware still finds itself facing off with juggernauts in the e-reading/tablet space. Several tablets, including Apple's iPad, allow people to read e-books in addition to download apps, surf the Web, and check e-mail. The iPad 2, for example, earned CNET's title of "best full-featured reading tablet."

What's more, Barnes & Noble is competing head-on with Amazon's Kindle e-reader. Amazon hasn't shared how many units of the device it has sold, but the company has said that the Kindle is its best-selling product ever. Earlier this year, Barnes & Noble said that it secured 25 percent of the e-reader market. Late last year, Amazon said that it owned 70 percent to 80 percent of the market.

Looking ahead, Barnes & Noble expects continued success for its Nook operation. The company said today that it plans to double sales in that division during this fiscal year, earning $1.8 billion, compared with $880 million last year. The book retailer also expects to see strong sales on its Web site with comparable sales increasing 60 percent to 70 percent year over year.