By Mimosa Spencer

PARIS (Reuters) -Kering warned on Wednesday its 2024 operating income would almost halve to its lowest in years as weak demand in China deepened the struggles of the French luxury goods group's main label Gucci.

The group which also owns fashion brands Saint Laurent, Balenciaga and Bottega Veneta posted a larger-than-expected 16% drop in third-quarter revenue to 3.79 billion euros ($4.08 billion).

Analysts had expected an 11% decline, according to a consensus estimate in a Barclays note.

Kering said its 2024 recurring operating income could be about 2.5 billion euros compared with 4.75 billion euros a year earlier, following the slowdown in the quarter and "major uncertainties" likely to weigh on demand in coming months.

In the first half it had guided for a 30% decrease in its second-half recurring income, which would have seen an annual income of 2.97 billion euros, according to Reuters calculations.

Kering's warning comes as the luxury sector suffers a slowdown. Luxury bellwether LVMH missed expectations last week and flagged a drop in Chinese consumer confidence to COVID-era lows, with a deterioration in demand for high-end fashion over the quarter.

"Overall, we were expecting a challenging 3Q print, and some level of reduction in FY24E EBIT guidance, however the magnitude of earnings erosion in the short term is worse than expected," analysts at RBC said in a note.

"It raises questions on earnings recoverability next year where we are likely to see further downgrades," they added.

Kering said demand weakened from the second quarter, particularly in Asia-Pacific, where sales fell 30%, and in Japan, which suffered a "significant slowdown".

Investors have been nervous about the industry since a post-pandemic spending spree lost momentum last year, with Chinese appetite for high-end fashion the key source of concern, sending luxury companies' shares on a roller-coaster.

The country's property crisis has curbed shoppers' enthusiasm, while recently-announced government stimulus measures have failed so far to rekindle demand for high end fashion.

GUCCI STRUGGLES

Sales at Gucci, which accounts for half of annual group sales and two-thirds of profit, continued to slide and were down 25% in the quarter, compared to analysts' consensus expectations for a 21% decline.

"We are executing a far-reaching transformation of the group, and at Gucci in particular, at a time when the whole luxury sector faces unfavourable market conditions," Kering Chair and CEO Francois Henri Pinault said in a statement.