Luxury goods maker Gucci, owner of French design house Yves Saint Laurent, posted a 14 per cent slide in third quarter net profit today after last week cutting its forecast for the year.
Gucci, the third biggest luxury goods group in a sector headed by France's LVMH, posted net profit of €52.9 million - at the low end of analysts' expectations and hurt by global economic weakness.
The group, home to British designers Stella McCartney and Alexander McQueen, last week cut its 2002 profit outlook, saying a downturn in November sales was a bad sign ahead of the vital Christmas season.
Luxury goods companies are suffering as even the wealthy are forced to tighten their belts in the global economic slowdown. Fear of war in Iraq is also weighing on sentiment as high-spending tourists are likely to curtail their travel plans.
The company set out the extent of the slowdown, saying today that group revenues edged up only 2.1 per cent in November after jumping 10 per cent in October.
Gucci shares, which have shed nearly nine percent so far this year, were flat at €87.35.
The weak sales in the Gucci Division, which accounts for around 60 per cent of total turnover for the group, contrasted with a 52.3 per cent surge in third-quarter sales at YSL. The group has been burnishing the YSL brand by buying back third-party licences and selling hot collections by Gucci star designer Tom Ford, who also designs the Gucci brand.
Gucci brand sales has also been lagging rivals such as LVMH. Fashion and leather sales in LVMH headed by Louis Vuitton jumped 11.1 per cent in the third quarter.