Sad tale for US giant, which owns 720 high-street shops in all 50 American states but saw profits slump

America's largest chain of high-street bookshops, Barnes & Noble, last night put itself up for sale in the latest sign of distress in the literary retailing world which has already seen the demise of the Borders book chain in Britain.

B&N, which owns 720 high-street shops in all 50 American states, announced it was calling in the investment bank Lazard to advise on strategic alternatives including "a possible sale of the company" after a 45% slump in share price in the last year.

In common with other booksellers, B&N has struggled with changes in customers' habits. Readers are buying more books online, while digital readers such as Amazon's Kindle are rapidly becoming popular alternatives to traditional books.

Although B&N has digital and internet offerings including an electronic reading device called the Nook, three-quarters of its turnover still comes from bricks-and-mortar stores which suffered a 4.8% decline in like-for-like sales to $4.3bn in the year to May.

"A review of strategic alternatives is the appropriate next step to take full advantage of our compelling digital opportunities and to create value for shareholders, customers and employees," said B&N.

The chain's founder Leonard Riggio, who started the business with a bookstore in New York's Greenwich Village in 1965, immediately declared that he was a possible buyer, sending Barnes & Noble's share price up by 25% in unofficial after-hours trading on the New York Stock Exchange.

Riggio is B&N's biggest investor with a stake of almost 25%. But Riggio has come under criticism from an activist investor, billionaire Ron Burkle, over a deal in which he sold his family's chain of college bookstores last year to B&N for $514m – a price that Burkle claimed was excessive.

The rise of the online bookstore Amazon has caused trouble for high-street retailers for years and the recent economic slump has made matters worse. In Britain, the 45-strong Borders chain went bust late last year. The US version of Borders came close to bankruptcy but survived after a debt refinancing.James McQuivey, an analyst at research firm Forrester, said taking B&N private may allow Riggio, or another buyer, to make tough decisions outside the gaze of public markets.

"They might feel they want to buy the company back now and take it public later and reap the windfall," he said. "But there aren't a lot of investors who will be that certain about the probable outcome of that bet."