€1.3bn windfall for Gucci investors

Luxury goods group Gucci announced plans to return €1.3bn (£710m) to shareholders after admitting it had run out of ideas about what to do with its cash pile. The move amounts to a windfall for Pinault-Printemps-Redoubt, the French retailer that has a 63% stake in Gucci, and reduces the price PPR will need to pay to buy the shares it does not already own in the Italian group.

Under the terms of a deal clinched just before the terrorist attacks on September 11, PPR is committed to buying the outstanding shares in Gucci at $101.5 in April 2004. But this price will now be reduced to around $85 to take account of the capital redistribution.

Domenico De Sole, president and chief executive of Gucci, said the group no longer needed the surplus cash for its own business development plans. "We continue to focus our attention and energy on growing all our operations and we do not expect to make significant acquisitions in the near future," he said.

No longer a single brand company focused on Gucci, the company now also owns luxury brands such as Yves Saint Laurent, Roger & Gallett and British designers Alexander McQueen and Stella McCartney after expansion and acquisitions. Gucci is due to give details of its first-quarter trading in July, and as it has a strong exposure to the US market is expected to give a clear indication of the impact of the Iraq war on consumer spending.