Gucci stumbles on U.S. recession
March 21, 2002 Posted: 4:39 AM EST
AMSTERDAM, Netherlands (CNN) - Italian luxury goods maker Gucci Group said on Thursday fourth-quarter profit slid as demand in the U.S. tumbled after September's terror attacks.
The world's third-largest luxury goods company, joins its biggest rival LVMH Moet Hennessy Louis Vuitton, in blaming an economic recession in the U.S. and the September 11 attacks for a sharp decline in profits.
Gucci, LVMH and No. 2 luxury brand group Richemont of Switzerland are highly dependent on tourists splashing out on lavish purchases while on holiday, but air travel has plummeted following the attacks.
Net income fell to $83.3 million, or 82 cents a share, in the three months to January 31 from $95 million, or 93 cents, a year ago.
Gucci, which owns the Yves Saint Laurent, Sergio Rossi, Alexander McQueen and Stella McCartney brands, said sales in the U.S. fell more than 20 percent to $89.2 million.
Chief Executive Officer Domenico de Sole told CNN "the U.S. economy is still difficult" and tourists have stayed away from its stores in Hawaii, Las Vegas and the West Coast.
Gucci said it remained cautious about the coming year due to the uncertain political and economic environment.
It reiterated its outlook for 2002, saying diluted earnings per share would fall to 2.60 euros-3.00 euros and sales would rise slightly to 2.7 billion euros ($2.38 billion) from $2.285 billion in 2002.
De Sole said its Yves Saint Laurent fashion unit, which it bought in 1999 for $1 billion, saw sales in the first six weeks of this year were up 200 percent as Gucci continued to turn around YSL and create a "multi-brand company" to rival LVMH and Richemont.
The company also said profits were dampened by its investment in new designers and lower interest on its cash pile.
Gucci's stock, which has risen about 8 percent on hopes of an economic recovery and a takeoff in travel, rose 1.4 percent to 104.50 euros in Amsterdam.
