LONDON — Burberry will soon be flying solo.

Great Universal Stores, which has a 66 percent stake in the London-based fashion house, said Wednesday it will demerge Burberry in order to refocus its own group structure and allow Burberry to flourish as an independent entity.

“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,” said Victor Blank, chairman of GUS, in a statement Wednesday. The statement added that the demerger will take place later this year, although it did not provide a specific time frame.

A Burberry spokesman called the move a natural one.

“This is very much a logical step for Burberry, following the partial flotation of the company in 2002,” he said. Burberry chief executive Rose Marie Bravo has run a tight ship since the company’s partial flotation on the London Stock Exchange, and as a result has attracted a string of blue-chip investors.

Earlier this week, Burberry posted an 18.2 percent rise in profits for the fiscal year ended March 31. Profits rose to $201.1 million, or 109.9 million pounds, from $170.2 million, or 93 million pounds, thanks to drum-tight cost controls, pricing and sourcing gains and fewer markdowns.

Sales rose 5.9 percent to $1.31 billion, or 715.5 million pounds, from $1.24 billion, or 675.8 million pounds, driven in part by the success of Prorsum, the collection that shows on the Milan runway.

On Wednesday, Burberry shares closed at $7.32, or 4 pounds, up 5.5 percent on the previous day’s close.

GUS chief executive John Peace said in a conference call Wednesday it will be “business as usual” for Bravo.

As a result of the strategic review, GUS has decided to separate its retail arm from its Experian financial services arm. GUS’s other main retail holding is Argos Retail Group, a catalogue company that sells items as diverse as household electrical goods, jewelry and furniture.

In the demerger, GUS will officially transfer its 66 percent stake in Burberry, worth nearly $2 billion, or more than 1 billion pounds, directly to GUS shareholders.

This story first appeared in the May 26, 2005 issue of WWD. Subscribe Today.

Technically, those shareholders already hold the Burberry shares through GUS, but after the demerger they will be free to trade them. They will also have a much bigger say in the major decisions at Burberry, such as board appointments, terminations and potential acquisitions.

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