San Francisco Frontiers - Gucci-owner Kering alerts on profits as earnings tumble

Revenues slid 11 percent and its flagship brand Gucci continued to underperform, with the company hit like other luxury firms by weakness in the key Chinese market.

"In a challenging market environment, which adds pressure on our top line and profitability, we are working assiduously to create the conditions for a return to growth," chief executive Francois-Henri Pinault said in a statement.

Net profit came in at 878 million euros ($953 million) on revenue of 9.0 billion euros.

Its measure of operating profit from ongoing operations fell 42 percent in the first half, and the company warned the figure could come in around 30 percent lower in the second half of the year "considering the uncertainties weighing on the evolution of demand from luxury consumers".

Gucci's 18 percent drop in sales far outweighed the seven percent drop by Yves Saint Laurent, while Bottega Veneta managed a three percent gain.

It noted a "continuing marked decrease in Asia-Pacific" sales.

The Chinese market has been the main source of growth for luxury firms in recent years, and the recent weakness in the world's second-largest economy has hurt their performances.

Gucci's operating profit plunged by 44 percent, a drop larger than the other two houses, but Kering said this reflected investments to help the brand rebound.

"The group prioritises expenses and initiatives supporting the long-term development and growth of its houses, while pursuing with determination the actions required in the current situation to optimise its cost structure," Kering said.

G.Allen--SFF