Italian businessman Andrea Bonomi has taken a 3 percent stake in Tod's to support long-term growth at the luxury goods group, a source close to the matter said on Wednesday, confirming a media report which sent Tod's shares up 8 percent.

Bonomi made the investment in the shoemaker through his Strategic Capital fund, which takes minority stakes in listed companies.

Bonomi has made other investments in the luxury and design industries through his private equity firm Investindustrial, which in December bought ailing Italian shoe brand Sergio Rossi from France's Kering.

Tod's, widely seen as a potential takeover target, has seen sales fall as it struggled to diversify away from its core shoe business and expand its presence into higher-margin leather handbags and clothing.

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Citi analysts said the departure of creative director Alessandra Facchinetti last year should help the brand "to refocus on its core, classic product offering."

Tod's shares fell 15 percent in 2016 against a 16 percent rise for the sector as a whole. The group's same-store sales fell 15 percent in the first nine months of 2016. They have declined for 12 quarters in a row.

The share price was up 9.9 percent at €66.80 by 10:51 GMT on Wednesday. Traders said target price increases by several brokers were also helping the stock.

Citi, which rates the stock a "buy", increased its target price to 69 euros from 57 euros to reflect the possible adoption of a favourable tax regime which rival Salvatore Ferragamo agreed in December with tax authorities.

"Under this agreement, a portion of the income generated from the direct and indirect use of intangibles will be exempt from Italy's corporate tax rate of around 31 percent," Citi said. "We believe Tod's might benefit from a similar tax treatment."

Also Barclays raised its target price on Tod's in line with a more positive view for the sector.

Consensus estimates for luxury goods companies are generally being revised upwards as Russia's economy begins to recover, higher oil prices support Middle Eastern spending and expected tax cuts under U.S. President Donald Trump are seen encouraging Americans to shop.

However, Barclays kept an "underweight" rating on Tod's saying like-for-like sales would probably continue to fall and margins remain weak in the short term due to tough competition in the market for its soft-leather bags and still difficult trading environment.