Barnes & Noble (NYSE: BKS) has seen its revenue steadily decline for about five years. That makes sense, since the company had no real digital strategy and Amazon more or less froze it out of that part of the market.

That left the brick-and-mortar chain as merely a way for customers to browse books before buying them on Amazon. Sure, the in-store visitor might buy a closeout item or something in the cafe, but the biggest piece of the sale -- the new book purchase -- too often went to Barnes & Noble's digital rival.

Image source: YCharts.

The physical retailer, however, does have its fans, and Barnes & Noble has focused on serving educators, book lovers, and collectors. Those customers never abandoned the chain, and while the mass audience may never come back, the company's latest quarterly earnings report shows that it might be able to survive -- and maybe even thrive.

How did Barnes & Noble do?

The bookselling chain (which also offers toys, collectibles, and some gift items) generated $1.2 billion of revenue in the third quarter of fiscal 2019: flat compared to the prior year. Same-store sales, however, rose by 1.1%. The company noted in the earnings release that this reflected its "best quarterly performance in several years."

But while the same-store increase is encouraging, it's not the chain's biggest achievement. That would be its $79.2 million operating profit, compared to an operating loss of $34.9 million last year. Net income came in at $66.9 million, or $0.91 per share, compared to a loss of $63.5 million, or $0.87 per share, in the prior-year period.

Those numbers, however, are somewhat deceiving, since last year's loss was driven by a one-time non-cash charge of $135.4 million. So, while profitability has technically improved, adjusted EBITDA actually decreased by $6.5 million last quarter. Management attributed the decline to increased marketing and promotional costs.

Barnes & Noble remains primarily a bookseller. Image source: Getty Images.

"In fiscal 2019, we have been focused on growing the top line, which contributed to our best holiday in years," Barnes & Noble Chairman Len Riggio said in the Q3 earnings release. "Sales benefited from our new ad campaign, increased marketing and promotions, and an improved omni-channel experience for our customers. We believe these efforts are laying the foundation for sustained growth."

The chain forecasts that full-year EBITDA will come in between $140 million and $155 million, excluding unusual or non-recurring items. That would be roughly in line with last year's adjusted EBITDA of $145.4 million, but well below the $175 million to $200 million that management expected as recently as November. The revised guidance reflects the "impact of incremental investments the company is making in its business, as well as lower than expected post-holiday sales," according to the press release.