Gucci results show travel effect

Print Article E-Mail Article

Gucci Group this week reported a 12% drop in fourth-quarter net profit and a 17% decline for the full year, citing the tourism slump and challenging economic conditions. Gucci said it continues to be cautious about the year ahead.

For the year ended January 31, Gucci net profit fell to $278.4m, compared with $336.7m a year earlier. The decline was smaller than expected because of a solid performance by the relaunched Yves Saint Laurent business. Total 2001 group revenues rose 1.2% to $2.285bn. Gucci said lower sales at the YSL and YSL Beauté units slightly offset a 1.3% rise in sales at Gucci's mainstay division to $1.515bn.

Losses in 2001 at the YSL division were $67.9m, less than the $75m Gucci had forecast. Gucci president and ceo Domenico De Sole said YSL was on track to turn a profit in the second half of 2003 with continued investment. The new YSL "Mombasa" handbag is also in high demand, Gucci said.

De Sole said the company had delivered strong results, especially in the last quarter. This was despite difficult economic conditions and particularly following September 11 "when the US recession took hold, consumer spending fell, and travel and tourism dropped dramatically."

"Against this backdrop, our group was one of the few in the luxury sector to achieve an increase in revenues and profitability during the fourth quarter," De Sole said.

On a regional basis Gucci said turnover at its directly-operated US stores dived 22.7% in the fourth quarter and continued to fall by double-digits early in the first quarter 2002. Japan sales surged, however, by double digits during the same period and business in Europe had been steady.