GUS wants to give up its 66% stake in Burberry

Ms Bravo will become vice-chairman, and her replacement will join the firm on 9 January as an executive director before taking over the firm in July 2006.

During that time it has grown from a struggling label into a major luxury brand with a five-fold increase in profits last year.

Ms Ahrendts joins Burberry from US clothing company Liz Claiborne.

'Role transition'

Rose Marie Bravo was previously president of Saks Fifth Avenue department stores in New York, and has been head of Burberry since 1997.

Burberry chairman John Peace said: "Over the past eight years, Rose Marie Bravo has led Burberry through an extraordinary transformation whilst achieving excellent results.

"Rose Marie and I agree that the time is now right for her role to transition to that of vice chairman."

Ms Bravo earned $3.8m (�2.2m) as chief executive last year.

Majority Burberry share owner GUS has said it plans to offload its 66% stake - worth over �1bn - by December, and concentrate on its Argos catalogue business and Homebase DIY stores.

Burberry and GUS are both due to give trading updates on Wednesday when more details of the break-up may be revealed.