By Matthew Dalton

PARIS -- Gucci posted its weakest quarter of sales growth in nearly two years, signaling that a run of buoyant revenue expansion at the Italian fashion house is coming to an end.

Sales were still robust, rising 35% to EUR2.1 billion ($2.41 billion) in the third quarter, Kering SA, Gucci's corporate parent, said Tuesday. But the brand's sales-growth rate has regularly topped 40% during a two year run that has made Gucci one of the best-performing brands in fashion.

Luxury-goods stocks have been hammered by concerns that slowing economic growth in China and an escalating trade dispute between Beijing and the Trump administration could prompt a pullback by China's big spenders. Chinese shoppers are the luxury industry's most important clientele, accounting for a third of all global sales.

Kering's shares have been among the hardest hit by these worries, falling nearly 31% since reaching an all-time high in June.

But Jean-Marc Duplaix, Kering's chief financial officer, said the brand has seen no evidence of a slowdown among its Chinese shoppers.

Mr. Duplaix said spending by Chinese shoppers world-wide, buying at home or on trips abroad, exceeded the rate seen in the first quarter, and was a touch lower than in the second quarter. Spending growth by Chinese shoppers inside China in the third quarter exceeded rates in the first two quarters of the year, he said.

Kering's other big brands reported a slowdown as well. Saint Laurent's revenue rose 16% to EUR447 million, the brand's lowest rate in more than two years. Mr. Duplaix said that Balenciaga sales slowed in the quarter, though growth remained above 50%, making Balenciaga Kering's fastest-growing brand.

Kering executives have for more than year been warning that growth at Gucci will fall well below 40%, as it becomes increasingly difficult for the brand to improve on previous strong quarterly performances.

"We are on par or maybe slightly above the growth rate we had in mind," Mr. Duplaix said.

The appointment of Alessandro Michele as Gucci's creative director at the start of 2015 led to a renaissance of the brand. Sales have nearly doubled since then, as Mr. Michele's eclectic designs attracted crowds of new shoppers to the brand.

Bottega Veneta posted an 8% fall in third quarter revenue, underscoring the challenge Kering faces turning around the Italian leather-goods brand. Kering recently appointed Daniel Lee, a relative unknown in the industry, to revive Bottega Veneta.

Write to Matthew Dalton at Matthew.Dalton@wsj.com

(END) Dow Jones Newswires

October 23, 2018 14:43 ET (18:43 GMT)

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