The company conceded that investment in e-books would hit earnings in the year ahead. “We are planning to redirect a significant portion of our financial resources towards investments in technology, sales and marketing,” said chief executive William Lynch. “These investments will impact our bottom line in 2011, but we believe they will enable Barnes & Noble to capitalise on the significant mid-to-long term growth opportunities presented by the digital markets.”

In common with others in the industry, Barnes & Noble is hoping that downloads of digital books, plus mail-order sales from its website, will make up for a decline on the high street. The company believes it can win a quarter of the digital books market and has set a target of group-wide sales of $8.9bn in 2014, compared to last year’s $5.8bn.

However, some feel this is optimistic. Michael Souers, an equity analyst at Standard & Poor’s, said: “There’s a risk inherent in switching strategies and there is significant investor concern about how long it will take to monetise the e-books strategy.”

The slump in Barnes & Noble’s share price put the stock at its lowest point since late 2008. Others in the industry are also suffering. Rival chain Borders recently refinanced its debt to stave off the prospect of bankruptcy. On the internet, Wal-Mart and Amazon have engaged in price battles offering deep discounts on bestselling books.

Related posts:

1. Consumer caution prompts only small rise in high-street spending and big drop in new car sales
2. Argos Blames £25m Fall In Profits On Lingering Effects Of Recession
3. Argos Profits Down 94%