GUS PLC announced Wednesday that luxury goods retailer Burberry will be spun off later this year and credit-checking group Experian will eventually be split from the remaining retail operations.
GUS said that it had decided that the breakup of the business — comprising Experian, Burberry and the massive ARG Retail Group, which includes catalogue-based department store chain Argos and homeware outlets Homebase — was the best long-term strategy for the group, but it did not provide a detailed timetable for the changes.
Analysts welcomed the Burberry announcement but were disappointed with the delay of the Experian spin-off.
"There is no strategic logic in maintaining the Argos retail group, Experian and Burberry within the same group in the long term," said GUS Chairman Victor Blank.
"While the separation of ARG and Experian will be undertaken at the right time in the future, the board has decided that it is appropriate to demerge Burberry later this year to give our investors a direct interest in Burberry's exciting future," he added.
Burberry on Tuesday reported that updated versions of its trademark check pattern on coats, scarves, handbags and other items had helped drive an 18 percent hike in annual profit to 109.9 million pounds ($201.56 million).
GUS said that its 66-percent stake worth more than $1 billion in Burberry will be returned in shares to existing shareholders who will be able to sell or keep them.
Evolution Securities analyst Nick Bubb suggested that a slowdown in British consumer spending in recent months was likely behind the decision.
"GUS could be forgiven for holding on to Experian at a time when U.K. retailing is having a tough time," said Bubb.
GUS acknowledged that trading conditions are difficult and said it is planning on a continued slump in consumer spending because of rising costs, such as housing rates and energy bills.
"Clearly Argos and Homebase are not immune from this downturn in demand or these cost pressures," it said in a statement.
However, the company said it intends to push ahead with extending the Argos chain to more than 750 outlets over the next four years.