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

PARIS, Oct 22 (Reuters) - 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.

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