* 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 a separate listing for the music and books retailer in 2013 as part of long-running efforts to refocus its business on luxury and sports brands.
Having failed to find a buyer for Fnac, PPR is keen to offload the struggling retailer at a time when it is starting to reap benefits from a restructuring and efforts to revamp its operations.
While PPR is keen to present Fnac as a turnaround story to shareholders, some analysts said PPR was also looking to separate the retailer from its accounts at a time when consumption trends in France were worsening.
"There is a risk that Fnac sales continue to fall in the months to come," one Paris-based analyst said.
PPR, which began its exit from retail with the sale of department store Printemps in 2006, had been looking for a buyer for Fnac for more than three years.
Last year, PPR made further progress on its plan to specialise in luxury and sports brands by selling furniture retailer Conforama. In July, it raised nearly 1 billion euros ($1.29 billion) by selling its remaining stake in distribution unit CFAO.
PPR, which owns luxury brands Gucci and Yves Saint Laurent and sports brands Puma and Volcom, presented the plan to Fnac workers on Tuesday, union sources said.
Analysts estimate Fnac to be worth between 500 million and 800 million euros and predict spinning off the business will boost PPR's valuation, which was pulled down by the flagging retail units.
Shares in PPR rose more than 3 percent on Monday after reports the group was planning to announce a spin-off of Fnac.
In terms of market valuation, PPR is still trading at a 5-15 percent discount to its bigger luxury peers LVMH and Richemont .
Broker Bryan Garnier estimated in a note that without Fnac, PPR's operating margin would reach 18.6 percent against 13.5 percent including the retailer.
The broker said assessing the impact of Fnac's sale on PPR's valuation was difficult as it depended on how much debt would be split between PPR and Fnac, "even if we believe most of the debt will be kept by PPR given the poor cash flow generated by Fnac."
PPR last year launched a restructuring of Fnac in which it shed more than 500 jobs, saved 80 million euros and widened its product offering to include more household electronics and toys.
"This demerger project is part of the dynamics of our 'Fnac 2015' transformation and expansion plan and will enable Fnac to implement its sustainable growth strategy autonomously," Fnac Chief Executive Alexandre Bompard said in a statement.
In the six months to June 30, Fnac made an operating loss of 7.5 million euros on revenues of 1.77 billion euros, down 1 percent, while PPR's luxury operating profits rose 30.4 percent to 727.1 million euros on sales up 18 percent.
PPR said the spin-off would see the group distributing Fnac shares to PPR shareholders but did not give more details or a more precise timing than the year 2013.
PPR will be using the same format retailer Carrefour
used to spin off and list Spanish discount chain Dia in Madrid last year and hotel group Accor used in 2010 to float Edenred, a provider of prepaid service vouchers.
If the spin-off goes through, it will mark a return to the stock market for Fnac, which was created in 1954 and obtained a Paris listing in 1980. PPR started investing in Fnac in 1994 and gained control in 1996.
The transaction would have to be approved by PPR's workers and shareholders at the next annual general meeting in the spring.
PPR shares closed 0.8 percent higher at 125.10 euros, making for a rise of about 13 percent this year.
The group added that the process for the disposal of its Redcats mail order business was under way and that all options were being considered.
"The whole process will take several months and announcements are likely to be issued in the coming weeks," PPR said.
Chief Executive Francois-Henri Pinault said last week that PPR expected to give an update on the Redcats sale before publishing third-quarter sales on Oct. 25. ($1 = 0.7754 euros)
(Editing by James Regan and Helen Massy-Beresford)
Keywords: PPR FNAC/