April showers

2 July 2003

The fashion group had a terrible quarter as sales slumped and it slipped into an operating loss. Gucci blames Sars, the war and currencies, but still seems to have suffered more than its rivals.

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Gucci said that the first quarter of the year had been uniquely challenging for the sector, and particularly March and April, where the war and Sars had a devastating effect worldwide. Sales at the fashion group declined by 14% in the quarter, falling in every region.

Gucci said that retail sales in Europe fell by 21% hit by the sharp fall in tourism. In constant currency terms, sales also fell in the US (12%), nonJapan Asia (5%) and Japan (2.2%). They increased in South Korea and Japan by 14% and 12% respectively.

Sales were also down in all product categories except jewellery. Operating profits fell 89% to E5.8m, if one excludes goodwill and trademark amortisation. Inclusive, Gucci slipped into the red at the operating level to the tune of E24m.

French retailer Pinault Printemps Redoute owns 64% of Gucci and has an obligation to buy out the rest in March 2004 at $101.50 per share.

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