Barnes & Noble profits fall by a quarter

Barnes & Noble is betting on the success of its Nook e-book

Barnes & Noble has reported a slump in profits and suspended its dividend payments as it continues to invest heavily in its e-book strategy.

Net profits for the three months to the end of January came in at $60.6m (£37.6m), a drop of 25% on the $80.4m it made a year earlier.

Shares in what is the largest US bookseller fell 11% after the results.

Last week, rival bookstore Borders filed for bankruptcy protection amid declining sales.

Barnes & Noble also said it would not be making any sales or profits forecasts for the current quarter.

It has invested heavily in its Nook electronic book reader in an attempt to gain ground on market leader Amazon and its Kindle reader.

"We intend for Barnes & Noble to be a leader in the exploding market for digital content," said the group's chief executive William Lynch.

Both Barnes & Noble and Borders have struggled in the face of fierce competition from supermarkets, online sales and digital books.