Sales of hardcover bestsellers were much stronger in the third period than one year ago, and the wave of new fiction titles just hitting stores should help lift sales in the fourth quarter, Barnes & Noble's executives told analysts in a conference call discussing third-quarter results. The company predicted that comparable-store sales at its superstores will be flat to up in the low single digits in the final quarter of 2006.

CEO Steve Riggio said the improvement in bestsellers actually began with strong demand for Bob Dylan's music CD Modern Times in late summer and then involved such books as The Thirteenth Tale and For One More Day. Despite the good performance by Modern Times, music sales were down in the quarter, Riggio said. He called B&N's music department "the right size" and said the store will continue to sell artists who appeal to its core demographics.

Riggio said the list of fiction titles this holiday is better than in 2005, citing titles from Nelson DeMille, James Patterson, Michael Crichton and Thomas Harris as potential bestsellers. In nonfiction, books by Jim Cramer, Jimmy Carter and Rachael Ray should do well, Riggio said. Gift books off to a good start included Martha Stewart'sHomekeeping Handbook and a surprise, Rainforest, published by DK Publishing.

In the third quarter, total sales rose 2.7%, to $1.1 billion, with superstore sales up 4%, to $972.1 million. Dalton sales continued to slide, off 28%. Sales at Barnes & declined 0.5%, to $95.8 million. CFO Joseph Lombardi said during the quarter B& changed the way it reports sales of used textbooks, a move that lowers sales but not profits.

B&N's new discount policy, which offers hardcover bestsellers at 40% off for customers enrolled in its membership program, is projected to cost the retailer $30 million in 2007. The company initiated the program, Riggio said, "to lock in our best customers." He said improvements in operating efficiencies put the company in a position where it could give something back to its customers.

Looking quickly ahead to 2007, COO Mitchell Klipper said he expects B&N to open 30 to 40 stores in the year, a combination of regional mall stores, relocations and new markets.