Burberry to float in July

Burberry hopes for July London float

LONDON, England (CNN) -- GUS, owner of the Argos chain of catalogue stores, plans to partially float its fashion house Burberry in mid-July.

Burberry, which is known for its plaid patterns and trench coats, has been valued at between £1.2 billion and £1.8 billion, according to analysts. The company is expected to float about 25 percent of Burberry on the London Stock Exchange.

GUS announced plans to float the business about 18 months ago but weak market conditions, a global economic slowdown and the September 11 terror attacks have delayed progress to the market.

Shares in GUS (GUS) have come under pressure amid concerns the floatation could be delayed again due to reasons beyond the company's control. Gus wants to dispose of the business to focus on its catalogue stores.

CNN NewsPass VIDEO Becky Anderson talks to GUS’s Victor Blank about its plan to float Burberry Play video

"The plan to float part of Burberry is an important step in the strategic focusing of GUS," John Peace, the chief executive of GUS, said. "Through the retention of a majority stake in the business, GUS shareholders will benefit from Burberry's future growth potential."

But recent stock market listings have not got off to a great start. HMV, the UK's biggest music retailer, saw its stock drop sharply and pub group Punch had to slash the price of its share to get the float under way.

GUS Chairman Victor Blank told CNN that the company may still pull the sale if market conditions deteriorate.

"There has always been the caveat 'subject to market conditions'," Blank said. "India and Pakistan are pointing nuclear missiles at each other. Come the day [of flotation] anything could happen."

The company will publish a prospectus in the week beginning June 24 and the shares will be sold to financial institutions. The general public will not be able to buy shares until they start trading on the LSE.

GUS shares rose 4.7 percent to 649 pence in midday London trading on news that the float may finally get off the ground and better-than-expected results. It said on Wednesday pretax profits before items rose 13 percent in the year ending March, to £552 million.

Burberry's stock market listing could coincide with the planned floatation of debt-laden Italian fashion house Prada, which recently announced plans to revive a twice-postponed initial public offering.

Burberry's operating profit rose 30 percent to £90.3 million in the year to end March 2002, from £69.5 million a year ago, Blank said.