(Bloomberg) -- Kering SA rose after the luxury company’s white-hot Gucci brand kept up its relentless growth pace at the start of the year, with online sales more than doubling in the first quarter.
The Paris-based company’s shares rose as much as 6.1 percent early Wednesday after it said comparable sales grew 37 percent in first quarter. Analysts had expected a 23 percent increase.
Designer Alessandro Michele’s crystal- and flower-coated reboot of Gucci has won over young luxury shoppers. After a more than 70 percent gain in Kering’s shares over the past 12 months, investors have been watching to see how long the Italian label can maintain its rapid growth. The latest results show that this year’s collaborations with hip artists and a runway show in which models carried props like baby dragons continue to resonate with fans.
“Gucci’s superiority to luxury peers seems set to dominate for several quarters more,” Bloomberg Intelligence analyst Deborah Aitken said in emailed comments.
The company has benefited from surging Chinese demand for luxury goods, which has also lifted the fortunes of LVMH and other rivals. Gucci’s online sales gains were led by the U.S., Kering said.
Gucci’s comparable sales rose 49 percent in the latest quarter, Kering said Tuesday after markets closed. Kering’s Saint Laurent and the division that includes fast-growing Balenciaga and Alexander McQueen also grew by double-digit percentages.
The company cautioned that it faces strong comparison bases in the second half of the year but expects its brands to continue to grow at a fast pace. Still, the company sees its performance beating initial expectations this year, Chief Financial Officer Jean-Marc Duplaix said.
“We delivered a remarkable performance in the first quarter and are confident that our brands can outperform the market in the remainder of the year through innovation,” Duplaix said on a call with reporters.
Kering sped up progress toward becoming a luxury-only group this quarter when it announced plans to spin off its shares in German sportswear maker Puma SE. It has also put the skateboarding label Volcom up for sale and moved to unwind its joint venture with Stella McCartney’s fashion brand, selling its 50 percent stake back to its namesake.
©2018 Bloomberg L.P.