Shares of Barnes & Noble (NYSE:BKS), the nation's largest bookseller, are moving higher today after the company posted strong first-quarter profits on a 22% surge in revenues to $1.45 billion. Net income rose to $12.5 million, or $0.17 per share, beating consensus estimates by a nickel and trouncing last year's $2 million loss.

Demand for hardback political titles, especially war-related commentary, drove sales at Barnes & Noble stores 13% higher to $910 million. Comps rose a healthy 9.6%, though, as management noted, a slow first quarter last year made for easy year-over-year comparisons. Comps were 6% higher at B. Dalton, with the mall-based stores contributing another $39.7 million to the top line.

Performance at (NASDAQ:BNBN) improved, but the online unit continues to struggle against (NASDAQ:AMZN) and is nowhere near achieving profitability. Net losses narrowed by 26% to $9.8 million, dragging earnings at the parent company down by $0.10 a share. Barnes & Noble owns 75% of and is slated to acquire the remaining 25% later this month.

The company is also a majority owner of GameStop (NYSE:GME), the nation's leading retailer of video games and entertainment software. In 1999, Barnes & Noble acquired GameStop, then called Babbages, later spinning it off and retaining a 63% stake. Sales at Gamestop's 1,600 stores ticked up 16% to a record $371.7 million, with net income rising 27%. Video games provide some flair to Barnes & Noble, with the unit delivering faster growth and higher margins than the relatively stodgy core book business.

Though the video game industry is highly cyclical, the volatility is muted by otherwise stable and predictable sales and earnings at Barnes and Noble. The unit now accounts for one quarter of total revenues, and ambitious expansion plans are in place.

With Barnes & Noble's first quarter now in the books, investors should turn to competitor Borders (NYSE:BGP), due to release after the bell today, for further clues of where the industry is headed.

Though second-quarter sales are unlikely to top the prior year's, which included the June release of the fifth installment in the wildly popular Harry Potter series, Barnes & Noble management has reaffirmed full year earnings guidance in the $2.19 to $2.26 range. That equates to a forward P/E ratio of 13, not exactly clearance level, but still somewhere in the bargain bin. competitor is a Motley Fool Stock Advisor recommendation. Sign up for six months, without risk, to learn more.

Fool contributor Nathan Slaughter routinely frequents the local Barnes & Noble, though he owns none of the shares listed.