Gucci's profit drops 27%

Italian luxury goods company Gucci Group NV, reported a 0.8 per cent decline in sales to GBP 1.7bn in the year ended January 31st. Net profit dropped 27 per cent from GBP 215.9m to GBP 156.7m. The Gucci division mostly caused the fall, where sales slid 9.6 per cent.

European sales for the Gucci division dropped 4.5 per cent to GBP 346.6m. Sales on the US market plunged 16.9 per cent to GBP 222.3m and sales in Asia endured a 9 per cent decline to GBP 466.5m.

While the company's main brand suffered the effects of a poor business climate, the Yves Saint Laurent business witnessed a sales jump of 44.7 per cent to GBP 101.2m. However, this division failed to drag itself out of the red posting a loss of GBP 44.8m.

The Gucci clothing division recorded a 13.2 per cent slide; sales in its core leather goods business decreased 11 per cent and the watch sector suffered an above average fall in sales of 16.7 per cent. The jewellery sector was the only one to record a plus of 16.4 per cent.

The Gucci brand was not only affected during the year by the general economic slowdown but also by weaker demand in the tourist markets. These negative factors are likely to make themselves felt during the current year, the management said.