In a memo sent to employees last week, Barnes & Noble chairman Len Riggio said with the retail environment the worst he has ever seen as a bookseller, the nation's largest bookstore chain is "bracing for a terrible holiday, and expect[s] the trend to continue well into 2009, and perhaps beyond." The release of the memo was first reported this afternoon by the Wall Street Journal.

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While Riggio said he still expects B&N to post a "decent profit" this year, the difficult financial environment means the retailer will need to be even more diligent with expense controls, inventory management and capital expenditures. B&N will continue to invest in its systems, but new store openings will be curtailed and discretionary spending "cut to the bone," Riggio wrote. In its second quarter report, B&N said it was reducing new store openings in 2009 to 20 to 25, down from its usual openings of 30 to 35 stores.