The world’s third largest luxury goods maker, Gucci Group NV, has posted its worst results to date, after the firm’s first quarter 2003 profits plunged 88.7% to Eur5.8 million ($6.6 million) and sales declined 6.7% to Eur567.1 million ($650.2 million).

The group cites the strong Euro, the war with Iraq and the outbreak of SARS in Asia. But it has also vowed to pull back its profits and sales during the rest of the year.

Revenues in the Gucci brand itself fell 13.7% to Eur320.4 million ($367.3 million). Sales in the leather goods division declined 16.3% to Eur152.1 million ($174.4 million), footwear sales fell 12.6% to Eur40.5 million ($46.4 million) and revenues in the watches division fell 22.9% to Eur32.7 million ($37.5 million).

In Europe, retail sales fell 21%, as the sharp fall in tourism led to lower sales in Gucci’s larger stores, particularly in Italy and France. In the US, retail sales were down 11.8%, while sales fell 4.7% in non-Japan Asia and 9.3% in Hong Kong. In contrast, sales rose 14% and 12.4% in South Korea and Taiwan respectively.

The group says it hopes its new Gucci collections, which started arriving in stores in June, will lure shoppers back in, in particular its ostrich leather bag with a giant horsebit buckle belt.

Gucci Group NV’s president and CEO, Domenico de Sole, said: “This quarter is the most difficult we have experienced. We have acted swiftly to meet the challenge and have continued to reduce costs aggressively and are already delivering strong collections for the fall/winter season. In particular, Gucci’s fall/winter leather goods collection is superb and has driven a significant shift in sales. Notably, we are seeing double-digit retail sales growth in Japan and Asia”.

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