Net income dropped to $80.4 million, or $1.40 a share, in the quarter ended Jan. 30 from $81.2 million, or $1.43, a year earlier, the New York-based company said today in a statement. The fourth-quarter loss will be 85 cents to $1.15 a share, the company said. Five analysts estimated a loss of 61 cents, on average, in a Bloomberg survey.

Gross margin, the percentage of sales left after the cost of goods sold, narrowed 370 basis points to 28.3 percent in the quarter. The Barnes & Noble College bookstores bought in September accounted for 270 basis points of the drop because textbooks are less profitable, Chief Financial Officer Joseph Lombardi said on a conference call. A higher percentage of online sales, including digital books and the Nook e-reading device, also ate into margins, he said.

"The main negative was their guidance for the fourth quarter and the gross margin overhang for Barnes & Noble College as well as the Nook," said Michael Souers, an equity analyst with Standard & Poor's in New York. "There's a longer-term impact there that investors are worrying about."