By Mimosa Spencer

PARIS, April 23 (Reuters) - French luxury group Kering

expects a 40% to 45% plunge in first-half operating

profit, it said on Tuesday, after first-quarter sales declined

as wealthy shoppers curbed spending on products from its star

label Gucci.

Sales for the three months ending in March were down 10% on

a comparable basis at 4.5 billion euros ($4.8 billion).

Kering had warned on March 19 that sales over the period

were likely to drop by around 10%, dashing hopes it had stemmed

sales declines at Gucci, the century-old Italian fashion house

which accounts for half of group sales and two-thirds of profit.

The warning prompted concern in the luxury sector about

prospects for China's rebound - traditionally Gucci's most

coveted market - which has been clouded by a property crisis and

high youth unemployment.

Sales at Gucci in the first quarter were down 18%,

significantly worse than the 4% decline in the prior quarter,

the company reported.

The revenue decline and ongoing investment needed in the

brand will hurt first half profits, with Gucci not seeing much

improvement in the second quarter, company executives told

analysts on a call.

The extent of the anticipated drop in first half profit was

larger than expected, however.

"It is not surprising that brands in transition may be

experiencing bigger difficulties in a softening demand

environment, as consumers concentrate their spend on must-have

brands," analysts at Bernstein said in a note.

"The magnitude of the profit descent, nevertheless,

surprises on the downside."

Traffic in luxury stores in Asia has been especially low,

Kering executives said.

"The Chinese market right now is fairly polarized between

appetite from clients for the very high end or more affordable

products, and Gucci, more positioned in the middle, is therefore

not benefiting from this polarisation," Chief Financial Officer

Armelle Poulou told journalists.

She added though that the situation could change

quickly.

The label was also suffering as Chinese shoppers wait for

its new collection to arrive in stores, said Poulou.

The first designs from new creative director Sabato de Sarno

began trickling into stores in mid-February. The designer's

pared-back, sensual styles have marked a departure from the

flamboyant approach of his predecessor, Alessandro Michele.

Kering has been pushing the brand upmarket, with a focus on

classic leather goods, and says that early products from the new

Ancora collection, which include glossy Jackie bags and chunky,

platform loafers, have been well received.

Kering shares have dropped 18% since March 19, while rivals

LVMH and Hermes are down 7.5% and 2.8%, respectively.