Barnes & Noble Inc's quarterly profit widely missed analysts estimates as the bookstore chain paid more tax and invested in its college books business ahead of its planned spinoff.
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The company's shares were down 2 percent in early trading on Tuesday.
Barnes & Noble said last month it would spin off its growing and profitable college books business and retain its Nook tablets and e-book business, instead of spinning off a combination of the two as previously announced.
The company said income taxes jumped 55 percent to $73.8 million in the third quarter ended Jan. 31.
Earnings before interest, taxes, depreciation and amortization at the company's college books business decreased 20 percent to $28.1 million.
Increasing competition from online retailers such as Amazon.com Inc has hurt sales at Barnes & Noble's stores as more people opt to read books on electronic devices.
In an effort to shore up margins, Barnes & Noble has been cutting costs by closing stores and reducing spending on its Nook e-reader business.
In June, last year it had planned to spin off the Nook Media business, which at the time included the company's profitable and fast-growing college books unit.
Total comparable retail store sales fell 1 percent in the third quarter, in line with analysts' estimates.
Net income rose 14 percent to $72.2 million, or 93 cents per share.
Revenue fell nearly 2 percent to $1.96 billion.
Analysts on average had expected a profit of $1.23 per share on revenue of $1.92 billion, according to Thomson Reuters I/B/E/S. (Reporting by Yashaswini Swamynathan and Ramkumar Iyer in Bengaluru; Editing by Joyjeet Das)