“We are a united family, which includes those who don’t work for the company,” said Patrick Thomas, chief executive of the group famous for its leather handbags and silk scarves. “The Hermès family does not view LVMH as a desirable shareholder.”
He also dismissed suggestions of synergies between the two groups, after Bernard Arnault, chairman and chief executive of LVMH, said he intended to play an active role as investor and suggested the two could explore collaboration earlier this month.
“We didn’t need LVMH to take a stake for these discussions,” Mr Thomas said as Hermès reported net income of €421.7m on sales of €2.4bn for 2010.
Hermès has received permission from the French stock market regulator to create a family holding company, which would give formal control of the capital to the Hermès family and the first right of refusal on share sales by members, following the unwelcome announcement by LVMH that it had acquired a stake of over 20 per cent in its smaller rival last year.
“They are clearly very proud of their independence. They don’t want to co-operate with or have anything to do with LVMH,” said Luca Solca, a senior analyst at Bernstein Research. “The decision to create a family holding will require a very big sacrifice from the family,” he added, saying the dividend increase today could not compensate for this.
LVMH took Hermès by surprise when the luxury goods conglomerate announced it had acquired a 17.1 per cent stake in the company last October through swaps, which it later increased to 20.2 per cent.
The holding company will be established in France added Mr Thomas, rejecting rumours that it would be outside the country for tax purposes.
Sales growth came “essentially from Asia”, said Mr Thomas. Revenues in the region were up 19 per cent to €1.084bn, driven mainly by the Chinese market. Sales in Europe, Hermès’ second-largest market by revenue, were up 18 per cent to €900.6m.
“Hermès has performed well. These are very strong results,” said Mr Solca, who added that recovery in the luxury sector and the weakness of the euro had supported them.
The company said it had no planned acquisitions but Mr Thomas added that it was “important to keep cash on hand to preserve our independence”.
Hermès raised its dividend from €1.05 in 2009 to €1.50.
Image: Hermes AW11