Gucci issues profit warning

December 18, 2001 Posted: 1012 GMT

LONDON (CNN) -- Italian luxury goods maker Gucci Group warned on Tuesday profits may decline next year amid "difficult" trading conditions.

The world's third-largest luxury goods company, joins its biggest rival LVMH Moet Hennessy Louis Vuitton, in blaming an economic slowdown 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.

"Management believes trading conditions for the luxury goods industry will remain difficult in the coming months and accordingly is particularly cautious for 2002," the company said.

Gucci, which owns the Yves Saint Laurent, Sergio Rossi, Alexander McQueen and Stella McCartney brands, also said on Monday net income halved to $56.3 million, or 55 cents a share, in its third quarter ending October 31, compared with $114.1 million in the same period a year ago.

The Amsterdam-listed company said it was sticking to its existing 2001 full-year profit outlook after two downgrades, saying diluted earnings per share were likely to fall to between $2.60 and $3.00 from $3.31 in 2000.   

Third-quarter group sales fell 7.9 percent to $566.2 billion and turnover in its core Gucci division, accounting for about 70 percent of the total, slipped 9.5 percent. The United States has been the weakest market area, where third-quarter sales in the Gucci division plummeted 23.7 percent.

Gucci shares were little changed at 93.15  in early Amsterdam trading on Monday. The company's stock hit a low of 61.43 on September 21 amid concerns about the economic impact on the luxury goods sector.