Demos Parneros, who was fired over allegations of sexual harassment and other inappropriate behavior, sued Barnes & Noble in August, saying that the company had falsely accused him of violating its sexual harassment policy.

The company is in the process of "healing and fixing," Chairman Leonard Riggio said on a post-earnings call with analysts, adding that the former CEO's lawsuit was "nothing but a smokescreen in an attempt to extort money from the company".

Barnes & Noble also reported a bigger-than-expected first-quarter loss as sales were hit by a "major glitch" in the company's website that stopped customers from looking up if their local store had a book in stock. Same-store sales also dropped more than analysts' estimates.

The company's shares were down 7 percent at $4.60 on Thursday.

(Reporting by Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila)