Barnes & Noble’s results for the first quarter ended July 31 continued the sales trends of much of the second half of fiscal 2010 with rapid growth at Barnes & and declining sales at the retail trade stores. Sales at B& increased 42%, to $145 million, with comp sales ahead 53%, while trade store sales declined 2%, to $1.03 billion and comp sales down 0.9%. Sales from the college stores, which B&N bought last September, added $225.6 million to revenues, which B&N said reflected comp store sales increase of 2.9%. As a result, total revenue increased 21% in the quarter, to $1.40 billion, but the company posted a net loss of $62.5 million compared to net earnings of $12.2 million in the first quarter of last year.

B&N expected to incur a loss due to its investment in its digital initiatives, but the loss included $9.5 million in pre-tax charges related to defending itself against the lawsuit filed by Ron Burkle challenging its poison pill. Higher than expected legal costs, as well as costs related to the proxy fight between B&N and Burkle caused B&N to lower its full year guidance for all of fiscal 2011, with the loss per share now predicted to be between 25 cents and 65 cents compared to original forecast of flat EPS to a loss of 40 cents per share.

Same store sales in the trade stores are expected to be flat to up 3% led by gains over the upcoming holiday period. College store comps are expected to be flat for the year.

The company shared few details about its digital business other than to say e-book sales continue to grow week after week and that 25% of Nook buyers were new to B&N.Responding to a question, B&N execs said a little more than half of its e-book sales come from the five publishers who use the agency model. In reporting comp store sales, B&N explained that those figures are based on the sales price not the portion of the sale B&N receives.

CEO William Lynch acknowledged that its trade book market business was under "some pressure," but that the company still expected to benefit from the coming consolidation in the physical bookstore market. Co-CEO Mitck Klipper deflected questions about plans for the bricks-and-mortar stores in 2011, noting only that about 100 leases are up for renewal next year and that renewal talks are going well. Expanding education toys and games departments as well as Nook boutiques are the priorities for the stores the remainder of 2010.