600 jobs to go as GUS winds down finance arm

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The Independent Online

Great Universal Stores, the home shopping group hit by the collapse of its catalogue sales, is to cut 600 jobs by winding down its motor-vehicle finance business.

Great Universal Stores, the home shopping group hit by the collapse of its catalogue sales, is to cut 600 jobs by winding down its motor-vehicle finance business.

The group, which includes the retailer Argos and the luxury goods label Burberry, admitted failing to find a suitable buyer after putting General Guarantee Finance (GGF) up for sale two years ago. "The decision to wind down was not an easy one," said John Peace, GUS chief executive, but he said it was seen as the best option. GUS shares were off 11.5p, closing at 430p.

Profit at the group's finance arm, which includes the contract hire business Highway Vehicle Management, has fallen by £5m to £34m over the past two years. Yesterday GUS, which in April valued the division at £701m net, agreed to sell Highway for £170m to First National, part of Abbey National. The cash salewill have a neutral effect on future group earnings.

However, bids for the larger GGF did not meet the asking price, said to be £240m. One analyst at CSFB said: "It's an unattractive business and therefore they were never going to get sexy offers." He said the decision downgraded the year's pre-tax profit forecast by £10m to £460m.

But GUS said income earned over the three-year wind-down of its 50 branches would match closure costs. It aims to recoup existing loans within 18 months.

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