GUS signals demerger of Burberry

Argos owner GUS signalled the break-up of its operations today with the demerger of luxury goods brand Burberry later this year.

GUS holds a 66% stake worth more than £1bn (€1.45bn) in Burberry and this will be distributed to its existing shareholders, who will be free to sell or keep the shares.

The company also disclosed an intention to separate the retail division that includes catalogue retailer Argos and DIY chain Homebase from credit checking arm Experian in future.

However, the company said both businesses would benefit from “further investment and support” and did not provide a specific timetable for any split.

Chairman Sir Victor Blank said the demerger plan followed a strategic review and comes just 24 hours after Burberry said updated versions of its trademark check had helped drive a 17% hike in annual profits to £164.4m (€239m).

He said: “The board recognises that there is no strategic logic in maintaining the Argos retail group, Experian and Burberry within the same group in the long term.”

The restructuring would only be carried out when conditions were right and disruption would be kept to a minimum at all its businesses, GUS said.

Details of the break-up emerged as GUS said pre-tax profits rose 10% to £910m (€1.3bn) during the year to March 31, with all three of its divisions reporting record results.

Sales were up 7% and profits ahead by 10% at the Argos retail group, which includes Homebase, although this lagged behind the rate of improvement at Experian where sales leapt 16%.