Barnes & Noble is considering splitting into two as a survival strategy

The largest US brick-and-mortar bookseller, facing fierce competition from online retailers like Amazon and discount stores like Wal-Mart, said yesterday that it planned to split off its Nook e-reader division in a bid to boost shareholder value.

The move received support from investors, which pushed shares up 6 per cent in midday trading.

The retail business in the US, which had been outperforming its Nook unit, includes its bookstores and BN.com businesses. Nook Media, in which software giant Microsoft Corp and educational book publisher Pearson Inc are invested, houses the digital and college businesses of Barnes & Noble.

CEO Michael Huseby told The Associated Press, the separation was the best option for shareholders.

He said, the businesses could achieve a more favourable capital structure and also operate at a higher level if they were separate.

Barnes & Noble invested heavily over the years in its Nook e-book reader and e-book library, but profitability remained uncertain. Though the company said in December, that it was evaluating the future of its tablets, but it however offered a new non-tablet e-book reader during the holiday season.

Huseby said the company would continue to offer its Nook glowlight e-reader but would largely focus on software and its e-book library.

For the latest quarter, the Nook segment posted a decline of 22 per cent in revenue to $87 million, the company said yesterday. Digital content slid 19 per cent to $62 million.

The company's retail segment however reported a 0.8 per cent increase in revenue to $955.6 million as the latest quarter included an extra week.

However, same-store sales, excluding Nook items, retreated 1.9 per cent, which the company ascribed to the unusually severe February weather. Including Nook items, same-store sales were down 4.1 per cent.

Market Watch quoted chief executive Michael P Huseby as saying the company believed it was now in a better position to begin in earnest those steps necessary to accomplish a separation of NooK Media and Barnes & Noble Retail.

He added, the company had determined that these businesses would have the best chance of optimising shareholder value if they were capitalised and operated separately.

In August last year the company had shelved plans to split after mulling it for 18 months.