* PPR focusing on luxury and sports brands
* Redcats disposal process to take several months
* PPR shares close 0.8 pct higher
(Adds details, quotes) By Astrid Wendlandt PARIS, Oct 9 (Reuters) - French retail and luxury group PPR
confirmed plans to spin off its Fnac unit and seek aseparate listing for the music and books retailer in 2013 aspart of long-running efforts to refocus its business on luxuryand sports brands.
Having failed to find a buyer for Fnac, PPR is keen tooffload the struggling retailer at a time when it is starting toreap benefits from a restructuring and efforts to revamp itsoperations.
While PPR is keen to present Fnac as a turnaround story toshareholders, some analysts said PPR was also looking toseparate the retailer from its accounts at a time whenconsumption trends in France were worsening.
"There is a risk that Fnac sales continue to fall in themonths to come," one Paris-based analyst said.
PPR, which began its exit from retail with the sale ofdepartment store Printemps in 2006, had been looking for a buyerfor Fnac for more than three years.
Last year, PPR made further progress on its plan tospecialise in luxury and sports brands by selling furnitureretailer Conforama. In July, it raised nearly 1 billion euros($1.29 billion) by selling its remaining stake in distributionunit CFAO.
PPR, which owns luxury brands Gucci and Yves Saint Laurentand sports brands Puma and Volcom, presented the plan to Fnacworkers on Tuesday, union sources said.
Analysts estimate Fnac to be worth between 500 million and800 million euros and predict spinning off the business willboost PPR's valuation, which was pulled down by the flaggingretail units.
Shares in PPR rose more than 3 percent on Monday afterreports the group was planning to announce a spin-off of Fnac.
In terms of market valuation, PPR is still trading at a 5-15percent discount to its bigger luxury peers LVMH andRichemont .
Broker Bryan Garnier estimated in a note that without Fnac,PPR's operating margin would reach 18.6 percent against 13.5percent including the retailer.
The broker said assessing the impact of Fnac's sale on PPR'svaluation was difficult as it depended on how much debt would besplit between PPR and Fnac, "even if we believe most of the debtwill be kept by PPR given the poor cash flow generated by Fnac."
PPR last year launched a restructuring of Fnac in which itshed more than 500 jobs, saved 80 million euros and widened itsproduct offering to include more household electronics and toys.
"This demerger project is part of the dynamics of our 'Fnac2015' transformation and expansion plan and will enable Fnac toimplement its sustainable growth strategy autonomously," FnacChief Executive Alexandre Bompard said in a statement.
In the six months to June 30, Fnac made an operating loss of7.5 million euros on revenues of 1.77 billion euros, down 1percent, while PPR's luxury operating profits rose 30.4 percentto 727.1 million euros on sales up 18 percent.
PPR said the spin-off would see the group distributing Fnacshares to PPR shareholders but did not give more details or amore precise timing than the year 2013.
PPR will be using the same format retailer Carrefour
used to spin off and list Spanish discount chain Diain Madrid last year and hotel group Accor used in 2010to float Edenred, a provider of prepaid service vouchers.
If the spin-off goes through, it will mark a return to thestock market for Fnac, which was created in 1954 and obtained aParis listing in 1980. PPR started investing in Fnac in 1994 andgained control in 1996.
The transaction would have to be approved by PPR's workersand shareholders at the next annual general meeting in thespring.
PPR shares closed 0.8 percent higher at 125.10 euros, makingfor a rise of about 13 percent this year.
The group added that the process for the disposal of itsRedcats mail order business was under way and that all optionswere being considered.
"The whole process will take several months and announcementsare likely to be issued in the coming weeks," PPR said.
Chief Executive Francois-Henri Pinault said last week thatPPR expected to give an update on the Redcats sale beforepublishing third-quarter sales on Oct. 25.($1 = 0.7754 euros)
(Editing by James Regan and Helen Massy-Beresford)
Keywords: PPR FNAC/