Gucci buys French house

July 6, 2001 Posted: 1107 GMT

LONDON (CNN) -- The world's No. 3 luxury goods maker Gucci said on Friday it bought French fashion house Balenciaga for an undisclosed sum.

The move comes less than a month after the Italian maker of items such as handbags, watches and high fashion said its revenue was hit by losses at its French fashion wear unit Yves Saint Laurent.

Gucci, which ranks behind France's LVMH (PMC) and Swiss-based Richemont in the sector, said it would own 91 percent of Balenciaga, with creative director Nicolas Ghesquiere holding the remaining shares.

Ghesquiere last month won the International Designer of the Year award from the Council of Fashion Designers of America.

Gucci,  which has been on a buying spree in recent years to catch up with its bigger rivals, said the impact of the takeover would not have a near-term material impact on its finances or earnings per share.

"We are delighted to acquire one of the world's great fashion brands and we are particularly pleased that Nicolas has agreed to play a key role in its future," said Gucci Chief Executive Domenico De Sole. "His work displays exceptional creative talent and commercial sense."

On June 21, Gucci posted lower-than-expected first-quarter profits and warned 2001 sales and earnings would miss targets, blaming the performance of Yves Saint Laurent and the U.S. slowdown.

Gucci posted first-quarter net profits of $55.9 million from $46.6 million in the same period a year ago, as revenues edged up 5.5 percent to $559.7 million.

Gucci's (GUC: Research, Estimates) U.S.-listed shares closed down 3.4 percent at $80.10 in New York trading on Thursday.

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