Book retailer Barnes & Noble's shares plummeted Thursday after the company cut its full-year earnings forecast following disappointing sales of its Nook Simple Touch e-reader.

Shares of Barnes & Noble were down 24.6 percent to $10.21 in late-morning trading.  

The New York-based retailer said it expects 2012 consolidated sales between $7.0 billion and $7.2 billion. The company expects full year losses to total $1.10 and $1.40 per share.  

The bookstore said it had overestimated consumer demand for black-and-white e-readers. However, losses will come as the company plans to invest heavily in the Nook line of e-readers and tablets.

Further, the bookstore chain said it will pursue strategic exploratory work to separate the Nook business, meaning its sales would be reported separately in quarterly earnings reports.  

We see substantial value in what we've built with our Nook business in only two years, and we believe it's the right time to investigate our options to unlock that value, CEO William Lynch said in a statement.

On Wednesday, it was reported that Barnes & Noble has put its Sterling Publishing unit up for sale, thus likely ending its business of publishing its own books.

Last month, the company reported a loss of $6.6 million in the second quarter following a decline in print book sales. The Nook has been able to offset those declines; however the product has faced significant competition from Amazon's Kindle and Apple's iPad.

Barnes & Noble has been helped by its rival Borders going out of business in September. Borders, which wasn't able to capitalize on the demand for digital content, filed for Chapter 11 bankruptcy in February and closed its stores after it was unable to find a buyer.

Yet during last year's nine-week holiday period, retail sales increased 2.5 percent over the prior-year period to $1.2 billion. sales increased 43 percent to $327 million compared to the year-earlier period, again attributed to an increase in Nook sales.