Gucci's sales growth remains sluggish in first quarter

By Astrid Wendlandt PARIS (Reuters) - Gucci's sales growth remained sluggish in the first three months of the year, hit in part by the brand's upmarket repositioning and the clean-up of its wholesale distribution network. The Italian brand, which represents the bulk of valuation for parent Kering , on Thursday posted a 0.3 percent rise in like-for-like sales for the first quarter, broadly in line with analysts' expectations. In a conference call with journalists, Kering Finance Director Jean-Marc Duplaix said Gucci's sales in China were still declining, without providing figures, but added that "trends are improving". Gucci still makes more than 20 percent of its turnover from wholesale buyers, whose contribution to comparable sales dropped 19 percent in the first quarter after some accounts with department stores ended. Revenue from directly operated stores was up 6 percent on a like-for-like basis. Kering said it had noted a drop in demand from Russian and Ukrainian customers due to the crisis in Ukraine but stressed that clients from these countries made up only 4 percent of total sales. Gucci, which already saw its sales stall in the fourth quarter, continued to underperform arch-rival Louis Vuitton, owned by industry leader LVMH , which posted comparable sales growth of close to 9 percent in the first quarter. Meanwhile, Britain's Burberry posted strong revenue growth for the first few months of the year, driven by solid demand in Asia. Overall, Kering's total quarterly luxury sales rose 6.3 percent to 1.6 billion euros (1.31 billion pounds) while revenue from the group's Puma sports brand fell 0.4 percent on a comparative basis and 6.6 percent on a reported basis. Puma, which is suffering from lacklustre demand in Europe, its biggest market, has been undergoing a deep restructuring and strategy change under new management which is taking time to yield results. Kering on Thursday also announced a reorganisation of its luxury activities with the creation of three divisions to better manage its brands. (Editing by James Regan)