Barnes&Noble Inc., America’s largest bookstore chain, said Thursday its second-quarter profit fell 27 per cent, but results beat analyst expectations as the company cut costs.

Profit for the three months ended Aug. 1 fell to $12.3 million US, from $16.8 million, or 27 cents per share last year.

Revenue fell five per cent to $1.16 billion, matching analyst expectations. Sales in stores open at least one year fell 6.9 per cent during the quarter.

Barnes&Noble and other booksellers have faced falling sales for some time as shoppers turn to online and discount booksellers. The recession has compounded the problem, with consumers severely limiting spending on discretionary items like books.

CEO Steve Riggio said the decline in retail traffic continues to hurt revenue but noted online traffic increased from a year ago.