By Jeffrey A. Trachtenberg

Improved results from Barnes & Noble Inc.'s (BKS) consumer stores group, ignited by the racy, hugely popular "Fifty Shades of Grey" erotic trilogy, enabled the bookseller to narrow its losses for the first fiscal quarter.

The nation's largest bookstore chain, continuing to benefit from the closing last year of Borders Group Inc., reported total revenue of $1.45 billion, up 2.5%. The company posted a quarterly loss of $41 million, or 78 cents per share, compared with a loss of $56.6 million, or 99 cents per share, in the year-earlier quarter.

The result for the quarter, which ended July 28, was significantly better than the loss of 96 cents per share expected by analysts, according to Thomson Reuters.

The company's 689 consumer bookstores stood out as their revenue grew 2% to $1.1 billion. Same-store sales--a measure of stores open at least a year--increased 4.6%. The unit's earnings before interest, taxes, depreciation and amortization jumped 88% to $75 million compared with $40 million in the year-earlier quarter.

"Traffic was up in our stores for the first time in many years," said Mitchell Klipper, chief executive of the retail group, during an analyst call Tuesday morning. Mr. Klipper added that he expects the "halo effect" of the Borders liquidation to slow for the remainder of the fiscal year and beyond.

Revenue at the Nook digital business was virtually flat, although Barnes & Noble said digital content sales rose 46%, suggesting that people who had bought Nook devices in earlier periods were now buying more e-books and digital magazines. The company has estimated that it controls about 27% of the digital-books market in the U.S., second only to Inc. (AMZN).

The retailer said revenue from devices fell due to "lower average selling prices" as well as "production scaling issues surrounding the popular newly launched Glowlight product resulting in unmet demand."

The retailer, which recently slashed its tablet prices, has had a difficult time keeping the popular Nook Glowlight e-reader in stock. During the conference call, Barnes & Noble Chief Executive William Lynch expressed frustration over lost potential sales but said the manufacturing issues have been resolved and Nook Glowlight products are now in stock in all locations.

Barnes & Noble is expected to soon unveil a new Nook Tablet for the holiday season.

The digital business loss, before interest, taxes, depreciation and amortization widened 11% to $57 million for the quarter from $51 million in the year-earlier quarter.

The widening Nook digital losses come at a time when Barnes & Noble is in a furious device battle in the U.S. with Inc.'s Kindle Fire tablet, Apple Inc.'s (AAPL) iPad and Google Inc.'s (GOOG) Nexus 7 tablet, among others. The landscape may soon grow even more crowded.

Microsoft Corp. (MSFT) in late April agreed to invest $605 million in exchange for a minority stake in the Nook business and Barnes & Noble's college bookstore group. The Microsoft investment is expected to close this fall. Barnes & Noble is creating a Nook app for Windows 8, which will enable Microsoft customers to access the retailer's e-books and other digital offerings.

Barnes & Noble's college store division reported slightly greater losses before interest, taxes, depreciation and amortization, on flat sales. Comparable college store sales fell 2%.

Write to Jeffrey A. Trachtenberg at

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