By Mimosa Spencer

PARIS, July 24 (Reuters) - Kering reported a

bigger-than-expected drop in second-quarter sales and forecast a

weak second half, as the French luxury group works to revive its

key label Gucci while facing subdued demand from Chinese

shoppers.

Sales at the French luxury group which also owns labels

Boucheron and Balenciaga, fell to 4.5 billion euros ($4.9

billion), an 11% drop on an organic basis, which strips out

currency effects and acquisitions.

The figure was below analyst expectations for a 9% drop,

according to a Visible Alpha consensus.

Kering said second-half operating income could fall by

around 30%, following a 42% drop in the first half to 1.6

billion euros.

"There was a deterioration of the trends in June that so far

are persisting in July," deputy CEO Jean-Marc Duplaix said on a

call with analysts.

However, chief financial officer Armelle Poulou told

reporters that the forecast smaller decline in operating profit

in the second half compared with the past six months was based

on a gradual improvement in revenue, especially for Gucci.

Sales at Gucci fell 19% in the quarter, showing no

improvement from the first three months, and below analyst

expectations for a 16% decline, according to a Visible Alpha

consensus.

Kering has been revamping Gucci, the century-old Italian

fashion house which accounts for half of group sales and

two-thirds of profit.

Minimalist designs from new creative director Sabato de

Sarno, which began trickling into stores earlier this year, are

key to the reset and push upmarket, in a bid to cater to

wealthier clients who are more immune to economic headwinds.

Poulou said that the designs had been well received and the

rollout was on track.

But the efforts have been complicated by a downturn in the

global luxury market, while China's rebound - traditionally

Gucci's most coveted market - was clouded by a property crisis

and high youth unemployment as Western markets came down from a

post-pandemic splurge.

On Tuesday, sector bellwether LVMH's quarterly

results missed expectations as sales rose 1%, offering few signs

that a pickup is around the corner, sending shares in the luxury

goods sector down on Wednesday. Kering traded at its lowest

level since 2017 ahead of its results.

Kering said Gucci experienced a marked decrease in

Asia-Pacific. Group revenues from Chinese consumers, both at

home and abroad, fell 25% during the quarter, Poulou told

analysts on a call.

Despite higher revenue in Japan, Kering's sales in Asia fell

25% in the second quarter, with Poulou pointing to large

declines in Hong Kong and Macau.

($1 = 0.9215 euros)