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Fashion house Gucci tightens belt
AMSTERDAM, the Netherlands -- Italian fashion group Gucci Group warned on Thursday it may not meet full-year financial targets because of "political-economic turmoil." The company said second-quarter net income fell 55 percent to 42.8 million euros ($42 million). Sales at the world's third-largest luxury goods group fell 6.9 percent to 577 million euros in the three months to July 31. Analysts polled by Reuters had expected Gucci to post a second-quarter profit of between 40.5 and 53.1 million euros, with consensus at 45.7 million. Gucci Chief Executive Officer Domenico De Sole trimmed the company's full-year revenue forecast to 2.6 billion euros from 2.7 billion euros and said it could miss its 2002 fully diluted net income per share guidance of 2.60 euros if trading conditions deteriorate. "I continue to believe, based on the most recent sales figures, that the Gucci Group can meet its 2002 objective... there is the risk that demand, in the face of global political-economic turmoil, may weaken, causing our results to fall short of this objective,'' De Sole said in a statement.
Gucci, joins its biggest rivals LVMH Moet Hennessy Louis Vuitton and Switzerland's Richemont, in blaming poor global economic conditions and slumping stock markets for a drop in demand. All three are highly dependent on tourists splashing out on lavish purchases while on holiday, but air travel has declined following the September 11 attacks. Gucci, which owns the Sergio Rossi, Alexander McQueen and Stella McCartney brands, said revenue at its Yves Saint Laurent (YSL) business, which it bought for $1 billion in 1999, rose almost 35 percent to 33.7 million euros. The Amsterdam-listed company, which has been busily trying to turnaround the loss-making YSL label, said the business is expected to generate double-digit revenue growth and trim its operating loss before one-time items in 2002 from the 76.2 million euros posted in 2001 Sales at the Gucci division came in at 367.4 million euros in the quarter, down 14 percent from the year-ago mark because of weak conditions in Europe and the United States.
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