MILAN — Gucci Group slashed its full-year earnings-per-share target by 23 percent on Monday, citing slower sales in the critical month of November. The company attributed the slide to trying economic times but some analysts questioned whether Gucci’s core brand is hitting a few bumps in the road.

"Although overall sales in November are not down, the excellent trend we spotted in September and October did not continue," said Gucci president and chief executive officer Domenico De Sole. "It is a very difficult economic and political moment."

Gucci said 2002 fully diluted EPS should be at least $2.02, compared with previous guidance of $2.63. (Dollar figures have been converted from the euro at current exchange rates.)

The company also cut its 2002 revenue target, saying group sales should come between $2.53 billion and $2.63 billion, compared with a previous forecast of $2.63 billion.

The news had little impact on Gucci shares, which retreated $1.10, or 1.2 percent, to close at $89.50 on the New York Stock Exchange Monday. Other luxury goods shares suffered as well. LVMH Moët Hennessy Louis Vuitton dropped 2.89 percent to close at $42.48 on the Paris Bourse. PPR, which owns a majority stake in Gucci, saw its shares fall 8.9 percent at $79.24. PPR is obliged to buy all outstanding shares in Gucci in 2004 at $101.50 — a factor providing strong support for the Gucci share price.

Jacques-Franck Dossin, an analyst with Goldman Sachs, said he wasn’t shocked by the news, and that the market had been too optimistic and estimates too bullish.

"The profit warning was not really a surprise," he said. "What surprised us was the magnitude of the warning."

Even before Gucci scaled back 2002 forecasts, Goldman’s estimates trailed those of the company. The bank saw 2002 EPS at $2.36, well below Gucci’s

previous guidance of $2.63.

Proud of a strong third-quarter showing, Gucci divulged ahead of schedule a few figures for the three months ended Oct. 31, showing rising sales but declining profitability.

Group revenue should come in at $652.4 million, compared with $566.2 million the year before. (Sales from the third-quarter of 2001 were reported in dollars before Gucci switched to report in euros.)Gucci’s third-quarter operating margin before goodwill and trademark amortization fell to 12 percent, compared with 14.3 percent the year earlier. Full third-quarter numbers are due Dec. 19.

Looking at just October, the company said sales of its main Gucci brand rose by 3 percent on the year while Yves Saint Laurent saw growth of 62 percent and YSL Beauté sales increased 8 percent.

But momentum from the third quarter didn’t propel Gucci into the holiday gift-buying season.

"Sales trends weakened during the month of November, leading management to adopt a more conservative view for the fourth quarter, especially in light of the important Christmas season," Gucci said in a statement.

De Sole said Gucci’s warning was merely a reflection of difficult market conditions faced by everyone. He said Gucci’s first impressions of the Christmas season are in line with those of other companies he has contacted.

"What I am told off the record from my colleagues very much reflects…that November was very difficult," De Sole said.

Andrea Paladini, an analyst with Centrosim in Milan, concurred with De Sole’s assessment. A bevy of markdowns and discounts at department stores and independent retailers is proof that Christmas is going to be tough.

"It’s not a positive sign," he said.

But other analysts and some of Gucci’s top competitors tell a different story on November numbers.

One of the first to pounce on Gucci’s bad news, arch rival LVMH on Monday issued a statement touting "excellent sales performance during October and November, with growth for the two months of 16 percent on a constant exchange rate basis (or plus 8 percent at current rates)."

LVMH confirmed its previous forecast of "significant" growth in profits for 2002. LVMH had indicated it expects operating income, which advanced 19 percent in the first half of the year, to grow even faster in the second half.

But analysts cautioned that direct comparisons should not be made since LVMH’s forecast is based not only on fashion and leather goods, but its vast stable of brands in wines and spirits, perfumes and cosmetics, watches and jewelry and selective retail.Giorgio Armani SpA and Prada Group were also upbeat.

"November seems to be progressing in a more positive fashion than last year," said Robert Triefus, vice president and director of worldwide communications for Armani.

Triefus did not disclose figures but noted November sales in Japan look "strong" and the showing in Europe appears "solid."

November sales at Prada were up 10 percent while Miu Miu sales rose 5 percent in the period, said Riccardo Stilli, Prada Group’s chief financial officer. The group’s smaller brands didn’t fare as well. Sales at Helmut Lang and Jil Sander were flat while sales at Church’s were up 2 percent.

"October was definitely a little better than November," Stilli said. "But November, especially for the Prada brand, was a good month and December has started off better than last year."

Meanwhile, some analysts expressed doubts as to whether Gucci’s woes are entirely macro-related, with some questioning whether Gucci’s fall collection is commercially viable.

Paola Durante, an analyst with Merrill Lynch in Milan, said she doesn’t think the current collection has less consumer appeal. Pieces like handwoven knits are labor-intensive and carry a bigger price tag than lines from previous years. That makes it tricky to move them off the selling floor, she said.

"This year, there was a lot of leather with much higher prices," Durante said. "In the medium term, that could bring good results but in the short term, it is having an impact."

Gucci said Monday that full-year sales estimates for its namesake brand are seen coming in between $1.52 billion and $1.62 billion, compared with a previous forecast of 1.6 billion euro.

Some in the industry suggested that the Gucci brand might be losing momentum as creative director Tom Ford shifts some of his focus to Yves Saint Laurent.

Meanwhile, there is increasing customer overlap for the Gucci and YSL brands, Franck-Dossin noted.

"Part of the client base of the Gucci brand is the client base of Tom Ford and when he moved to YSL, some of his clients moved with him," he said.Still, Franck-Dossin said he thinks Gucci is on the right path to recapture its margins through cost-cutting moves and a push to restore the Gucci brand’s exclusivity through made-to-order products like handbags and men’s suits.

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