Now that Borders Group has entered a new chapter of its existence -- namely, Chapter 11 -- it might be tempting to feel bullish about its surviving superstore rival, Barnes & Noble (NYSE: BKS). However, despite its major rival's recent hobbling, B&N's story still might not have a happy ending.

Granted, Barnes & Noble has more than a few positive attributes. It's enjoyed a decent success with its Nook e-reader, and the company recently added several innovative features to its Nook Color, including an app store and the ability to access Yahoo! Mail and Gmail accounts. It's also reportedly looked into taking over a few abandoned Borders stores for its own shops. Still, while B&N may be doing better than Borders, "relatively strong" isn't the same as "strong."

Although Barnes & Noble has been able to pull off sales increases over recent years, its gross profit has dropped to 25.6% in the last 12 months, down from highs as great as 37% in recent years. Same-store sales have fallen several years running, and the company failed to turn a profit last year. For the trailing 12 months, Barnes & Noble has reported a disheartening $0.81 loss per share. The recessionary climate hasn't made things easy for booksellers, and its falling profit margins suggest that Barnes & Noble's had to offer deep discounts to keep customers coming back.

The rise of e-books to challenge traditional paper tomes makes matters even worse.'s (Nasdaq: AMZN) Kindle has dominated that space, and Amazon was already a formidable competitor in old-fashioned books. Apple's (Nasdaq: AAPL) iPad and other tablets, not to mention mobile phone applications, could also divert e-book revenues away from Barnes & Noble.

This heated competition explains Barnes & Noble's Nook Color enhancements, but such admirable efforts don't guarantee marketplace success. The Nook currently has about a quarter of the e-book market, while the Kindle gets most of the rest.

Last summer, I earmarked both Borders and Barnes & Noble as stocks to avoid, even though Borders faced the most imminent danger. Barnes & Noble's shares have fallen about more than 50% in a 12-month period, but they're still no bargain, given the company's struggles with profitability and the difficult competitive landscape.

Can Barnes & Noble succeed where Borders faltered? Can its Nook enhancements help it steal much-needed market share from Amazon's Kindle? Let's hear your thoughts on the superstore book business in the comments box below.