GUS may lose out on Burberry.
GUS is forging ahead with plans to separate 25 per cent of Burberry, leaving the City questioning whether it had already missed the boat.
GUS has pushed the button on a partial float that will value the luxury brand at more than pounds 1 billion.
It was backed by figures showing a surge in profits from pounds 10.7 million in 1999 to just over pounds 90 million last year, on worldwide sales just under pounds 500 million.
But analyst yesterday said the time to float Burberry was 18 months ago when the brand was 'hot' and estimated to fetch around pounds 2 billion at an initial public offering.
Since, brand's valuation has been shaken by a sharp slowdown in the luxury goods market post September 11. 'Now, as bankers put the finishing touches to the share sale, the Burberry brand is not so hot,' City commentator.
The City's nagging fear that GUS may have left it too late has been heightened in recent weeks by the lukewarm response to new issues such as Punch Taverns and HMV, he continued.
The issue could also pit Burberry against another celebrated brand, Italy's Prada, which will also be trying to catch the eye of investors this summer.
'That will help draw attention to the luxury goods sector but as it is a very small sector there will only be a certain amount of institutional money to be allocated,' said Andrew Gowen, luxury goods analyst at Lehman Brothers.
'So on the pricing side these two will be played off against each other.
'We could potentially have two luxury goods companies floating within a month of each other,' said Mr Gowen, who reckons Burberry should be priced at the bottom of the range.
But GUS's chief executive John Peace shrugged off the fears by pointing out that many analysts had been urging the group to sell Burberry for only pounds 200 million a few years ago.
He added: 'This move is part of our continuing strategy to bring greater focus to GUS and allow us to establish a market value for Burberry on behalf of GUS shareholders.
Burberry delivered an excellent performance despite the impact of September 11 which affected so many other luxury goods companies.'
Burberry's pathfinder prospectus will be published in the last week of June, with dealings due to start mid-July, subject to market conditions.
GUS had originally timetabled Burberry to float in June.
The confirmation followed another stellar performance by GUS in the year to March 31.
Pre-tax profits at the international retailer and service group rose 13 per cent to pounds 552 million, excluding exceptionals, with record profits at Argos, Experian and Burberry.
Group sales grew seven per cent to pounds 6.5 billion with earnings per share before amortisation of goodwill and exceptional items grew 12 per cent to 41.7p from 37.2p.
Operating profits at Argos grew 27 per cent to pounds 204 million while Experian increased its contribution by six per cent to pounds 229.1 million in the face of tough US conditions.
A final dividend of 15.2p was proposed, making 21.7p for the year, up from 21p last time.
GUS closed at 659p.
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|Publication:||The Birmingham Post (England)|
|Date:||May 30, 2002|
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