This duo made Gucci cool again

Gadget couture: A Silicon Valley fashion show

Investors are just realizing what the fashion crowd has known for months: Gucci has got its groove back.

Shares of Gucci's parent company Kering surged by as much as 10% in Paris on Wednesday after the company reported standout results in the latest quarter.

Gucci, which is the company's biggest moneymaking division, reported third-quarter sales grew 18% from last year to €1.1 billion ($1.2 billion).

Gucci's creative director Alessandro Michele, along with CEO Marco Bizzarri, are being credited for reviving the brand since taking their jobs in early 2015. (Michele's Instagram account has legions of followers, a sign of his standing among fashion-lovers.)

Gucci stands in sharp contrast to other luxury brands that have been in decline at a time when tourism has taken a hit in Europe following a spate of high-profile terrorist attacks.

A recent report from consulting firm Bain & Company predicts global spending on luxury goods will dip 1% this year to €249 billion.

gucci Alessandro Michele Marco Bizzarri
Gucci CEO Marco Bizzarri and creative director Alessandro Michele have revived the Gucci brand.

Equity analysts are gushing over Gucci and have raised their expectations for Kering's financial performance.

Charmaine Yap, a retail analyst at Jefferies, said the Gucci logo has been revamped and new products have taken off in popularity among its high-end customers -- such as the new Dionysus bags.

"This is their new statement piece which is becoming more and more of a symbol for Gucci," she said.

Gucci Dionysus purse bag
The Gucci Dionysus purse has become the new "It" bag.

Yap is optimistic that the Gucci brand is strong enough to stand the test of time even though fashion can be fickle.

"Gucci has brand strength to continue to do well in the near future," she said.

Gucci's strong performance and surge in online sales contrasts sharply with sales declines at smaller sister brand, Bottega Veneta, which is also owned by Kering.

Bottega Veneta sales declined 9% in the latest quarter to €294 million.

Kering also owns brands such as Puma and Yves Saint Laurent.

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