UPDATE 1-PPR's Q2 beats forecasts, keeps 2008 target

(Adds more details, management quotes, closing share price, background)

By Astrid Wendlandt

PARIS, July 23 (Reuters) - French retailer PPR (PRTP.PA) posted a 5.1 percent rise in like-for-like sales for the second quarter, above market expectations, and said it remains confident that its financial performance will improve in 2008.

The Paris-based group, which owns the Italian fashion house Gucci and French retail chain Fnac, generated revenue of 4.678 billion euros ($7.36 billion) in the three months to June 30.

PPR was expected to produce sales of 4.66 billion euros according to the average forecast given in a Reuters poll of eight analysts.

Gucci Group sales were 761 million euros, up 16 percent on a like-for-like basis, stripping out the impact of currency fluctuations, acquisitions and disposals. The average of analysts' forecasts was 745 milion euros.

On a reported basis, Gucci Group sales were up 8.8 percent.

"We confirm the objective for 2008 of another year of improved financial performance," Finance Director Jean-Francois Palus said in a conference call with reporters.

Palus said the Gucci spring-summer collection had gone down well with customers and the product mix, weighed towards more higher end products, had proved very favourable.

"Footfall in the stores has been very good," Palus said.

PPR also owns fashion design houses Stella McCartney, Sergio Rossi, Yves Saint Laurent, Balenciaga and Alexander McQueen as well as the jeweller Boucheron.

The figures come after Hermes (HRMS.PA) published resilient double-digit second-quarter comparable sales in most of its markets, including the United States and Western Europe but leaving out Japan were growth was weak.

PPR's Fnac chain saw revenues rise 3.1 percent on a like-for-like basis to 978 million euros but sales from its Conforama retail chain were down 1.7 percent like-for-like to 706 million euros.

Its Puma sports brand generated an 11.2 percent rise in comparable revenues but the Redcats group, which includes its mail order business, saw business decline 3.9 percent during the period on a like-for-like basis.

PPR's share price has been one of the worst performers in the luxury goods sector, having lost about 43 percent so far this year on expectations of weakness at the company's retail operations and worries about the market positioning of the Gucci brand.

PPR shares closed up 5.25 percent at 66.60 euros lifted by the broader Paris stock market. (Editing by Greg Mahlich)