PARIS (Reuters) -Shares in French group Kering fell on Wednesday to their lowest since March 2020, dragging down other luxury stocks, after the company reported weaker than expected sales for the third quarter at all of its fashion labels.

Kering, whose shares have already lagged behind rivals such as LVMH and Hermes this year as a turnaround of its star label Gucci has yet to pay off, was the worst performer on the euro-zone blue chip index STOXX50E.

Shares fell just over 3% by 0819 GMT, having earlier shed almost 5%, which also weighed on LVMH, Moncler and Ferragamo.

Overall, the luxury sector has been hit by slowing demand for fashion and accessories, particularly in the United States and Europe. But Gucci, which accounts for over a half of Kering's annual sales and is in a middle of a revamp following a disappointing performance over the past two years, is losing market share to rival brands.

Kering's overall sales fell 9 percent, steeper than the 6% drop forecast by analysts.

Gucci saw a fall in third-quarter sales of around 7%, while LVMH fashion and leather goods division, which includes Louis Vuitton and Dior, clocked sales growth of 9% over the same period. Birkin bag-maker Hermes did even better with a rise in sales of 15.6%.

Analysts at Citi said that rising economic and geopolitical risks could delay Gucci's reboot, though they added Kering remained an attractive investment because of the group's track record in revamping sluggish labels.

Kering has undertaken a sweeping overhaul at Gucci, reshuffling the brand's top management and appointing a new creative director, Sabato De Sarno, who unveiled his first collection in September.

But De Sarno's new, minimalist looks, which marked a departure from the label's eccentric styles that had fallen out of fashion, especially with younger Chinese, will not hit stores before early next year.

Deputy CEO Jean-Marc Duplaix told analysts late on Tuesday that Gucci's profitability would decline this year compared to 2022, and would be flat next year, due to the need for investments in advertising and store events to keep momentum going around the brand.

Besides Gucci, revenues at Kering's smaller brands that until recently had enjoyed stellar growth also declined in the third quarter, with Saint Laurent posting a 12% fall and Bottega Veneta down 7%.

Beyond worsening economic conditions, Kering said the fall in sales reflected its move to take distribution in-house by reducing sales through wholesale channels in a bid to cut promotions and move its labels upmarket.

(Reporting by Silvia Aloisi and Mimosa SpencerEditing by Miral Fahmy)