Jun 25, 2014 2 min read

NEW YORK – Barnes & Noble hopes to survive by splitting in two.

The largest U.S. brick-and-mortar bookseller, beset by tough competition from online retailers like Amazon and discount stores like Wal-Mart, said Wednesday it plans to split off its Nook e-reader division as it looks to boost shareholder value.

Investors applauded the news, sending shares up more than 6 percent in trading.

The company’s retail business, which is outperforming its Nook unit, includes its bookstores and BN.com businesses.

Nook Media, which counts software company Microsoft Corp. and educational book publisher Pearson Inc. among its investors, houses the digital and college businesses of Barnes & Noble.

Chief Executive Officer Michael Huseby said in an interview with Associated Press that the separation is the best option for shareholders.

“The businesses can achieve a more favorable capital structure and also operate at a higher level” if they are separate, he said.

Barnes & Noble spent years investing heavily in its Nook e-book reader and e-book library, but struggled to be profitable. In December, the company said it was evaluating the future of its tablets, but it still offered a new nontablet e-book reader during the holiday season.

Huseby said the company will continue to offer its Nook glowlight e-reader, but for the most part, the Nook business will focus on software and its e-book library.

The company expects the separation to be complete by the end of the first quarter of the next calendar year, implying April 2015.

The New York-based chain, which announced earlier this month it was teaming with Samsung to develop Nook tablets, said its board approved the separation plans. It hopes to complete the separation by the end of the first quarter of 2015.

Barnes & Noble Inc. also reported its fiscal fourth-quarter loss narrowed to $36.7 million, or 72 cents per share, from a loss of $114.8 million, or $2.04 per share, a year earlier. Revenue for the period ending May 3 edged up to $1.32 billion from $1.28 billion.

Analysts surveyed by FactSet expected a loss of 49 cents per share on revenue of $1.19 billion.

Looking ahead, the company anticipates that fiscal 2015 sales at bookstores and college stores open at least a year will decline in the low-single digits.

Shares rose $1.26, or 6.1 percent, to $21.82 in midday trading. The stock is up 38 percent since the beginning of the year.