Kering Q2 sales miss expectations as Gucci weighs

French luxury group Kering missed market forecasts for second quarter sales, eking out growth of just 3% and continuing to lag rivals as it seeks to turn around business at star label Gucci.

Overall sales came in 4.96 billion euros ($5.45 billion), at constant rates, falling below analyst expectations for a 6% increase, according to a Visible Alpha consensus, with Gucci sales up by 1% over the period.

This compares with double digit growth from other luxury companies, including larger rival LVMH, which reported a 21% rise in sales of its fashion and leather goods division, home to Dior and Louis Vuitton earlier this week.

Kering’s recurring operating income fell by 3% in the first six months of the year, with Gucci posting a 4% decline and Other Houses – which include Balenciaga, hit by an advertising controversy last year – sliding by 34%.

The operating margin fell to 27% from 28.4% as the group invested more heavily in a bid to support its weaker labels.