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Ahead of split from Nook, Barnes & Noble trims the fat

In its latest quarter, the bookseller narrows its adjusted losses in its struggling Nook digital division by $50 million.

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Barnes & Noble now sees its future in its bookstores, not its Nook devices. Justin Sullivan/Getty Images

Barnes & Noble significantly slimmed down spending on its Nook digital business during its fiscal first quarter, as the book retailer prepares to split off the money-losing business next year.

The company in June said it would break apart into two companies, separating from its Nook business -- which includes its line of tablet computers, digital content and accessories -- after it failed to gain a foothold in the competitive tablet market against Samsung, Apple and others. The separation is planned for early next year.

For the latest period, the Nook segment posted $70 million in revenue, down 54 percent from a year earlier, but adjusted losses shrank by $50 million to $4.6 million. Barnes & Noble said the smaller loss was the result of cost-cutting efforts at Nook it started last fiscal year, which helped expenses drop by $27 million from a year earlier.

Shares rose about 2 percent in early trading Tuesday to just under $24. The stock is up 60 percent since the start of 2014.

However, device and accessory sales in the Nook division fell 79 percent to $18 million, and digital content sales dropped 24 percent to $52 million, showing evaporating consumer interest in Nook devices.

After losing millions of dollars trying to develop its tablet devices business, Barnes & Noble signed a deal with Samsung in June that effectively ended the bookseller's move into hardware design, except for some black-and-white e-readers. Barnes & Noble now leaves others to build Nook branded devices while it focuses on software and Nook content sales.

Barnes & Noble said it plans to continue to promote Nook for now, with the company last month unveiling the co-branded Samsung Galaxy Tab 4 Nook , its first tablet with Samsung.

Looking to refocus on its core bookstores business, the bookseller last month teamed up with Google to provide same-day delivery of books, toys and magazines from brick-and-mortar Barnes & Noble stores in three markets using Google Shopping Express.

For the quarter ended August 2, Barnes & Noble posted a loss of $28.4 million, or 56 cents a share, compared with a year-ago loss of $87 million, or $1.56 a share. Revenue fell 7 percent to $1.24 billion, though cost of sales and occupancy dropped 11 percent.

Analysts polled by Thomson Reuters expected a loss of 63 cents a share on revenue of $1.26 billion.

The retail segment, which includes the Barnes & Noble bookstores and BN.com, reported revenue of $955 million, down 5.3 percent from the prior year, due to a 5.1 percent decline in store sales excluding new and closed locations. Excluding sales of Nook products, that store sales decline was only 0.4 percent.