Mostly this is because of craptacular Nook device sales--although excluding the Nook, sales at the stores were down 3.1%, which is bad, but not as bad as the 10.9% decline you get when you throw the Nooks in.
The Nook business overall (devices + e-books) was down 12.6%, but sales of e-books and the like were actually up 13.1%. So the device is the real albatross around the neck of the Nook business, but the brick-and-mortar business is declining just fine on its own. (Apparently people don't bother to go to the bookstore any more. Gee, I wonder why?)
Over the past three years, the Nook business has lost $733 million. The main problem isn't that they're losing money (which is often the norm for a new business), it's that Nook sales are tanking as other tablet/e-reading devices are doing fine. So they are failing to compete effectively, which is Not Good, and the old cash-generating business is faltering, which is also Not Good.