Bags of cash Yves St Laurent sales lift the mood at Gucci

American fashion designer Tom Ford, the man who transformed Gucci from a bombed-out brand to a must-have label, is working his magic again. First-quarter financial results from the Italian fashion house showed a deeper than expected slump - but the shares rose as analysts and investors applauded the progress made at Yves St Laurent since Mr Ford moved in. Gucci bought the sinking brand in 1999, and YSL first-quarter revenues were up 63% this year to &euro33m 16321m. Retail sales climbed 177% to &euro22m. Gucci said the growth was due to the acclaimed spring-summer collection and expanded accessory lines. Handbags generate huge margins and YSL leather and shoe sales - powered by the top-selling Mombasa handbag above - were up more than 200%. The core Gucci business, which accounts for two thirds of turnover and where sales were down 12%, is still suffering from the downturn in international travel and spending by tourists in key US and European shopping cities. Sales in Hawaii, a crucial tourist market, were down 41.5% and overall US sales were down 26%. These are trying and uncertain times, said chief executive Domenico De Sole. Net profit fell 42% to &euro35.5m, well below analysts forecasts shoes of &euro43.8m. Rivals LVMH and Richemont are also suffering. Mr De Sole said he had always expected a slower recovery than many analysts. There was this optimism 91about economic recovery93 and I never understood where it was coming from. But he said he expected improvement in the second half and has not changed full-year forecasts. Gucci is now the worlds third largest luxury brands group and is developing new brands such as Stella McCartney and Alexander McQueen own-labels.

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