Luxury goods giant Gucci Group NV on Wednesday posted a worse-than-expected 42 per cent year-on-year plunge in first quarter net profit to £22.7 million as it was hit by falling sales in a weak global economy.

The company said sales slipped 1.5 per cent to £388m and it was "cautious" about the rest of the year. It added its profits had also been hit by an operating loss before goodwill at French unit Yves Saint Laurent.

But Gucci reiterated its 2002 sales outlook of around £1.7 billion and earnings per share of between 2.60 euros and three euros.

Chief executive, Domenico De Sole, commented: "The trading environment in the first quarter was characterised by depressed levels of international travel and tourism, and weak consumer spending in the United States and Europe.

"These are trying and uncertain times and consequently we have to be cautious about the rest of the year."