Aurora to Separate Karen millen Clothing Brand With View to Sale

March 1 (Bloomberg) -- Aurora Fashions, the U.K. fashion retailer that is majority owned by Iceland??s failed Kaupthing Bank Hf, plans to split off its Karen millen unit, a step that may lead to the sale of its largest, most profitable business.



Karen millen, founded in 1981 and with outlets across 40 countries including the U.S., Dubai and Russia, will become a ??separate company,?? Aurora said in an e-mailed statement today. The remaining brands of Coast, Oasis and Warehouse will stay together as Aurora Fashions Group. Derek Lovelock will be executive chairman of both companies.



The change ??would facilitate?? a sale of Karen millen, Chief Financial Officer Richard Glanville said in an interview. ??We know Kaupthing will not be long-term holders of our shares, but there is no pressure on us to sell for a year or so,?? Glanville said. ??We are in no hurry.??



Karen millen, which sells women??s fashions such as a $350 satin dress, had revenue of 250 million pounds ($406 million) last year and got 60 percent of sales from outside the U.K., compared with 6 percent in 2004. The planned independence of the business, which includes an additional 20 million pounds of bank funding, will help accelerate international expansion in markets such as China, Mexico, Canada and Italy, Glanville said. The brand has 91 stores in the U.K. and 220 overseas.



??It appears that Aurora is looking to break up the company and it would be a logical move as Karen millen has a good brand position and brands are in fashion,?? Kate Calvert, a retail analyst at Seymour Pierce, said by phone.



Aurora Fashions, which has 1,278 stores globally excluding Karen millen, is owned by Kaupthing and former managers, who bought the brands from administrators in March 2009. The Icelandic bank owns about 90 percent and managers 10 percent.



The owner of the clothing chains before Aurora, Mosaic Fashions Hf, entered bankruptcy protection two years ago following newspaper reports that it owed creditor Kaupthing 450 million pounds in the wake of Iceland??s financial crisis.