Barnes & Noble Inc. said it would pursue a split of its retail and Nook e-reader businesses into two separate public companies.

The bookseller said it plans to complete the separation by the end of the first quarter of the next calendar year.

Shares jumped about 7% in recent premarket trading.

The company has struggled as its Nook device--the company's bid to compete with Amazon.com's edge in the e-book market--has failed to catch on.

For the latest quarter, the Nook segment posted a 22% revenue decline to $87 million, the company said on Wednesday. Digital content sales fell 19% to $62 million.

Barnes & Noble's retail segment, meanwhile, posted a 0.8% increase in revenue to $955.6 million as the latest quarter included an extra week. However, same-store sales, excluding Nook items, fell 1.9%. The company pointed to "unusually severe February weather," as one reason for the decline. Including Nook items, same-store sales fell 4.1%.

"We believe we are now in a better position to begin in earnest those steps necessary to accomplish a separation of NOOK Media and Barnes & Noble Retail," said Chief Executive Michael P. Huseby. "We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately."

The company in August abandoned any plans to split up the company after considering the idea for 18 months. Also, Leonard Riggio, the book retailer's chairman and largest shareholder, decided against making a personal offer to buy the company's consumer bookstores.

Those moves followed the company's decision to scale back the company's efforts in the hardware space. Subsequently, William Lynch, who was a prime player in the Nook push, resigned as CEO. The company named Mr. Huseby as CEO in January.

Earlier this year, Mr. Huseby said Barnes & Noble will likely make its next color tablet in collaboration with a third-party manufacturer, an idea disclosed last June but put on hold when Mr. Lynch left the following month.

Overall, for the fiscal fourth quarter ended May 3, the company posted a loss of $36.7 million, or 72 cents a share, compared with a loss of $114.8 million, or $2.04 a share, a year earlier.

Revenue rose 3.5% to $1.32 billion, though the year-earlier quarter included one less week.

Analysts polled by Thomson Reuters had projected a per-share loss of 59 cents a share and $1.19 billion in revenue.

Gross margin widened to 32.1% from 18.1% as input costs fell 14%.

Write to Anna Prior at anna.prior@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires