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While B&N may be okay-ish now, I think it's pretty clear that the brick and mortar business is in deep trouble...it may take 5 years or so for the coming collapse, but the signs are all there:
1) Massive cutbacks in inventory. My local B&N appears to be carrying about half of what it did 2-3 years ago.
Lots of push to shoppers on non-book items, like the Nook, games, etc...thinks that take up a lot of room with very low product density. After all, Build-a-Bear and other non-book crud was what was going to save Borders, right?
The current B&N reminds me a LOT of Borders a couple of years ago just in terms of how the stores "feel": selection, display, general attitude.
2) Many stores that are far too large for their market (if this were not so, the stores would be full of merchandise instead of having half-empty shelves, minimal backlist and huge sections devoted to the Nook and other non-core business items, huge open areas on the floor where shelves used to be, etc.)
3) The Nook is a fickle bet...Amazon has made it clear that they are willing to do whatever it takes to be cheaper, to have better pricing. B&N is using up a ton of money on engineering and manufacturing a device with an extraordinarily short life-cycle. I almost think they would be better off pushing the Apps more (PC, Mac, Android) and working with other tablet manufacturers to get the Nook app on their devices.
4) The advantage of bricks-and-mortar B&N is discoverability...you can just wander into a store and find something you never knew existed but once you see it, you just have to have it.
Online retailing does not replicate that experience at all.
Yet, by cutting back on inventory, by telling shoppers, "We can special order it and have it in a week...or you can get it right now on Nook," they are pushing people away from the chain's one remaining strength.
B&N is, in effect, telling customers, "Don't bother coming to our stores, just buy online."
But the problem with that approach is that they are a clear 2nd-class player online. Much as I dislike some of Amazon's policies, they are clearly dominant and there is nothing I've seen to suggest that B&N is going to be able to distinguish themselves enough to be anything more than a much smaller rival to Amazon.
I think B&N needs to give serious consideration to reviving the small bookstore concept, like B Dalton/Waldenbooks: much lower rents and overhead, not nearly as many titles need to give the impression of a "full store." I don't see how the big box stores in many markets can survive as ebooks take 10%, then 20%, then 30%+ of the market -- sure, the right stores in the right locations will continue to thrive, but a lot of the existing B&N stores are going to be in real trouble.
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