Gucci's sales drop 5% in third quarter as weak Chinese demand dampens turnaround hopes

By Reuters News

- Kering PRTP.PA on Thursday said sales at its flagship label Gucci fell by 6% in the third quarter, in line with market expectations, as low store traffic in China weighed on the Italian brand's performance.

Sales at Gucci, which accounts for roughly half of group profits, were down to €1.29 billion ($1.44 billion) in the quarter, Kering said, while total group revenues fell by 1% when adjusted for currency swings.

Asked by journalists on a call if returning to overall growth was still the aim for Kering this year, finance chief Armelle Poulou declined to comment, pointing to the publication of full-year results.

Store footfall remains the main problem at Gucci, whose sales have been declining for more than three straight years. Revenues from the brand's own store network were down 9%, Kering said, while wholesale and licensing revenues were up.

Lower-than-expected quarterly sales at peers LVMH LVMH.PA and Hermes HRMS.PA, and signs of cooling demand in the US have added to investors' concerns around Kering's turnaround.

"We keep on carrying out our plan with the utmost discipline", Poulou said, adding the group has so far reduced its retail network by 105 stores and was targeting 125 closures by the end of the year.

($1 = 0.8934 euros)

Capital.com is an execution-only brokerage platform and the content provided on the Capital.com website is intended for informational purposes only and should not be regarded as an offer to sell or a solicitation of an offer to buy the products or securities to which it applies. No representation or warranty is given as to the accuracy or completeness of the information provided.

The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.

To the extent permitted by law, in no event shall Capital.com (or any affiliate or employee) have any liability for any loss arising from the use of the information provided. Any person acting on the information does so entirely at their own risk.

Any information which could be construed as “investment research” has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.