Barnes & Noble's Story Not Happy

NEW YORK (TheStreet) -- Barnes & Noble(BKS) delivered the type of earnings report that isn't a very hard read: the book retailer posted a 20% drop in second-quarter profit.

Granted, the company managed to beat Wall Street's expectations, which likely sent shares up 5% to $22 before the bell. But by midmorning, investors had apparently decided that this was not a story with a happy ending, and had sent shares in the company down by more than 1% to $20.66.

During the quarter the company earned $12.3 million, or 21 cents a share, compared $16.8 million, or 27 cents a share.

Excluding a benefit from an insurance settlement, the company's profit was 14 cents a share, beating Wall Street's expectation of 9 cents.

"Due to strong expense management and improved gross margins we achieved earnings per share near the high-end of guidance," CEO Steve Riggio said in a statement. "While the decline in retail traffic continues to be the principal impediment to our top line, we do offer our customers the ability to shop with us online, where sales were slightly above last year."

Revenue slipped 5% to $1.16 billion, while total same-store sales dropped 6.9%.

Barnes & Noble has been facing increased competition from book discounters like Amazon.com(AMZN).

During the quarter the company announced that it purchased its College Booksellers from its chairman.