Barnes & Noble Inc had a deeper-than-expected fourth-quarter loss as the largest U.S. bookstore chain came under pressure from going-out-of-business sales of rival Borders Group Inc.

Barnes & Noble said on Tuesday that sales at its namesake superstores open at least 15 months fell 2.9 percent during the quarter as Borders liquidated 200 stores.

But the retailer, which has bet heavily that it can remake itself as a leading digital bookseller, said sales of its Nook e-reader, e-books and accessories tripled during the quarter, reaching about $250 million.

Our digital business model is beginning to take shape, Chief Executive William Lynch told investors on a conference call, adding that Barnes & Noble has a 27 percent share of the e-books market.

Online sales, helped by Nook, rose 78 percent, while same-store sales at the College bookstore chain rose 3.5 percent. Each segment accounts for about one-sixth of sales.

Barnes & Noble, which put itself up for sale last summer, is evaluating last month's $1 billion bid by John Malone's Liberty Media Corp .

The company gave indication of when its board might make a recommendation, saying only on the call that a special committee was still evaluating the bid.

Barnes & Noble shares, which have more than doubled since April, were down 0.4 percent at $20.06 in late morning. The stock has been trading above Liberty's $17 offer since the bid was made, suggesting investors believe another suitor may step in.

Morningstar analyst Pete Wahlstrom said Barnes & Noble shares were modestly overvalued and expressed doubts that another bidder would emerge.

Digital is growing nicely, but probably not enough to materially change how third parties are thinking about the overall business (at this point) and incent them to come in and bid, Wahlstrom said.

Citing the Liberty bid, the company said it would not provide a sales or profit forecast.

Overall quarterly sales were up 4 percent at $1.37 billion. Barnes & Noble had a loss of $59.4 million, or a loss of $1.04 per share, in the fourth quarter ended April 30, compared with a loss of $32 million, or a loss of 58 cents a share, a year ago.

Analysts, on average, had expected a loss of 91 cents per share, according to Thomson Reuters I/B/E/S.

PINNING HOPES ON NOOK

The Nook has become the second best-selling e-reader. During the quarter, Barnes & Noble introduced an improved version of its Nook Color tablet to better compete with Apple Inc's iPad. It also began selling a touchscreen Nook.

The majority of Nook sales came from Barnes & Noble's 717 superstores.

Barnes & Noble introduced the Nook in 2009 to compete with Amazon.com Inc and its market-leading Kindle. But the investment is expensive. In February, the chain suspended its dividend to conserve money for the Nook.

A year ago, Barnes & Noble told shareholders it was setting aside $140 million to develop the Nook. The company did not say how much it would budget this fiscal year, but Chief Financial Officer Joseph Lombardi said in an interview that Barnes & Noble would continue to invest in the Nook.

Barnes & Noble said that once Border stores had closed, sales improved in those markets. But Lombardi said 450 Barnes & Noble superstores were coming up for renewal in the next four years, meaning the chain could close stores if need be.

We have a lot of flexibility to decide to renew leases or exit, Lombardi said.

(Reporting by Phil Wahba, editing by Maureen Bavdek and Lisa Von Ahn)

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