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Barnes & Noble core retail business stabilized during holidays

A patron looks at books at a Barnes & Noble bookstore in Pasadena, California November 26, 2013. REUTERS/Mario Anzuoni

By Phil Wahba

NEW YORK (Reuters) - Barnes & Noble Inc's mainstay retail business showed signs of stabilizing during the holiday period, renewing the belief on Wall Street that the bookseller's stores remain a viable business.

The largest U.S. bookstore chain on Thursday reported a 5.5 percent decrease in comparable sales at its bookstores and on its website over the holiday period. But that was caused primarily by a drop in the number of Nook e-reader devices sold.

Excluding devices and accessories in its Nook business, comparable-store sales declined only 0.2 percent in the nine weeks ended December 28. Sales from that business generate two-thirds of total company revenue.

Shares rose 7.7 percent to $15.68 in late trading.

This year, the rate of growth of e-books has shown signs of abating after years of torrid growth, easing pressure on chains like Barnes & Noble.

Between January and October, sales of hardcover adult books in the United States rose 7.6 percent, while e-books sales grew 2.2 percent over that period, according to data from the Associate of American Publishers.

"We increasingly believe that digital book sales are plateauing, which is a positive longer term for the brick and click retail segment," Janney Capital Markets analyst David Strasser wrote in a note.

The company's in-store sales benefited from a wider array of educational toys and games, said Mitch Klipper, who oversees Barnes & Noble's retail stores.

Revenue for its Nook business, including e-readers and tablets as well as digital books, fell 60.5 percent from a year earlier in large part because Barnes & Noble did not introduce new tablets for the 2013 holiday season while it did so a year earlier.

Barnes & Noble introduced the first of the Nook e-reader in 2009 in the hopes of competing with Amazon.com Inc. But the device, successful at first, stumbled, prompting the company in 2013 to scale back its operations.

But Michael Huseby, who became CEO on Thursday, reiterated his faith in Barnes & Noble's digital business and said the company planned to introduce new devices in 2014.

"We need to have devices in our stores and online to be relevant to sell books," Huseby told Reuters in an interview.

(Reporting by Phil Wahba in New York; Editing by Jeffrey Benkoe and Cynthia Osterman)