Gucci overtakes Hermès as designer Michele seduces shoppers

The Italian fashion label closed out the year with another quarter of runaway growth, with comparable sales rising 45% in the fourth quarter, parent owner Kering SA said in a statement on Tuesday. That drove Gucci’s revenue past that of rival Hermès.

Kering brands ranging from Saint Laurent and streetwear label Balenciaga joined Gucci in reaping the fruit of youth-focused reboots. Millennial shoppers have been leading the luxury industry’s rebound, with customers under the age of 35 making up 85% of growth last year, according to consultancy Bain & Co.

“We are continually impressed by the momentum at Gucci,” wrote Hermine de Bentzmann, an analyst at Raymond James.

The Italian brand’s efforts under designer Michele and CEO Marco Bizzarri since 2015 CEO have seen Gucci roar back after years of sluggish sales. Gucci had revenue of €6.2bn last year, while Hermès International had €5.5bn.

“We have a new generation of designers who have a more global vision,” chief financial officer Jean-Marc Duplaix said in a call with reporters. He says the creative chiefs worked on extending their aesthetic to everything from store decor to social media campaigns to events to offer clients an immersive experience.

Kering shares were little changed in early trading, having more than doubled in the past two years.

Last year Gucci attracted young shoppers through collaborations with Instagram poets and pop-up events where they could personalize their handbags with butterfly and flower motifs, as well as by extending Michele’s look to new categories like watches and ad campaigns for perfumes produced by licensee Coty.

Balenciaga continued to push logo hoodies and luxury sock sneakers while Saint Laurent splashed out on a Paris Fashion Week spectacle, strutting out thigh-high feather boots and sparkly warm-up jackets in a nighttime show framed by the Eiffel Tower.

Last month Kering took a step toward fulfilling its aim of becoming a pure player in luxury fashion when it proposed spinning off 70% of shares in German sportswear brand Puma to its own investors. Duplaix said investors will get 1 Puma share for every 12 of Kering.

Kering’s earnings rose 56% last year to a record.