PARIS (Reuters) – Shares in French luxury goods company Kering (PA:) fell sharply on Wednesday, after Kering’s star fashion brand Gucci grew sales by just 3.8% in the third quarter, missing analyst expectations.

Kering’s shares were down by 3.4 percent in early session trading, making it the worst-performing stock on France’s benchmark CAC-40 index.

The fall in Kering also dragged down shares in its French rival LVMH, with LVMH shares falling 0.9 percent, while Hermes also fell 0.6 percent.

“Gucci growth was disappointing, with retail sales +2% on a 2-year basis, decelerating from Q2 (+11%), negatively impacted by increased pandemic restrictions in APAC and a lack of product newness,” wrote JP Morgan in a research note.

Luxury goods groups have bounced back strongly from the fallout of the health emergency, lifted by pent-up demand for high-end wares as lockdowns ease across the world and consumers return to socialising.

However, shopping by travelling tourists – a key source of revenue for the sector – remains well below pre-pandemic levels.