Gucci issues profits warning

Gucci has warned its profits may decline next year as trading conditions worsen.

The company's third-quarter revenues have dropped to £38.6m from £78m.

Group sales fell 7.9% to £388bn and turnover in its core Gucci division, accounting for about 70% of the total, slipped 9.5%.

The US has been the weakest market area, where third-quarter sales in the Gucci division plummeted 23.7%.

Gucci, which owns the Yves Saint Laurent, Sergio Rossi, Alexander McQueen and Stella McCartney brands, blamed a downturn in the global economy for the company's dwindling profits.

Chief executive Domenico de Sole said: "The global market for luxury goods continues to be affected by the slowing world economy, and the impact of the September 11 terrorist attack on global travel and tourism.

"We have moved quickly and decisively in response to these events. We have been extremely aggressive in reducing operating costs."

Cost-cutting measures have included cutting Gucci's payroll.