Gucci slumps in wake of US terror

LUXURY goods group Gucci has revealed the financial scars left by the feel-bad effect that followed the 11 September terrorist attacks on the US, with a 26.4% slump in operating profits to $239m (£167m).

Sales at the Italian fashion-to-jewellery house, which is controlled by 53.2% shareholder Pinault Printemps Redoute of France, inched ahead just 1% to $2.28bn in the year to end-January. But while the results were not as disastrous as the market had feared after a profits warning last autumn, some sales were achieved at the cost of operating margins, which slipped from 18.1% to 15.5%.

Executive chairman Domenico De Sole said that the performance in the fourth quarter had been remarkably good, given consumers' caution over spending and the autumn slowdown in air travel.

Gucci demonstrated that it has some of the most powerful brands in the industry, with fourth-quarter sales of its core brand down by only 4%, to $422.7m. The most remarkable feature was a massive surge in sales at the Yves Saint Laurent ready-to-wear business, which nonetheless lost $67.9m.

The autumn/winter collection designed by creative director Tom Ford was a roaring success, and new lines from Stella McCartney, Alexander McQueen and Zegna heralded further strong progress towards profit, De Sole said.