Barnes & Noble Inc reported a narrower-than-expected quarterly loss and raised its full-year outlook on Thursday, helped by cost cuts and sales that topped expectations, and its shares rose nearly 5 percent.

The largest U.S. book store operator said its net loss widened to $2.7 million, or 5 cents per share, in the first quarter ended on May 2 from $2.2 million, or 4 cents per share, a year earlier.

Excluding the impact of discontinued operations, the loss was 4 cents per share, much smaller than the 15 cents analysts on average were expecting, according to Reuters Estimates.

Sales fell 4 percent to $1.11 billion.

Shoppers have been paring back on nonessential items, including books, in the recession, while online competition has also pressured sales at traditional bookstores.

Sales at Barnes & Noble's stores fell 3.5 percent to $989 million, with sales at stores open at least a year falling 5.7 percent. That was better than the company's forecast for a same-store sales decline of 6 percent to 9 percent.

Online sales fell 7 percent to $93 million.

Best-selling book titles during the quarter included Sandra Dallas' Prayers for Sale, Spencer Quinn's Dog on It, Steve Harvey's Act Like a Lady, Think Like a Man and Malcolm Gladwell's Outliers.

Based on the first-quarter results, the company said it expected full-year profit of $1.10 to $1.40 per share, up from its prior forecast of 95 cents to $1.25.

Barnes & Noble said it expected second-quarter earnings of 5 cents to 15 cents per share on a same-store sales decline of 5 percent to 7 percent. Analysts were expecting a profit of 3 cents per share, according to Reuters Estimates.

As of May 2, the company operated 726 Barnes & Noble and 51 B. Dalton stores.

Barnes & Noble shares rose $1.11, or 4.7 percent, to $25 in early trading.

(Reporting by Martinne Geller; Editing by Lisa Von Ahn)