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Feb 3, 2011
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Hermes Q4 sales jump, to pay interim dividend

By
Reuters
Published
Feb 3, 2011

PARIS, Feb 3 (Reuters) - French luxury group Hermes said on Thursday that sales in the final three months of 2010 jumped by a quarter and it lined up an interim dividend to reward shareholders with some of its bounty.

Hermès
Photo : AFP.

The maker of Birkin and Kelly handbags said it would give shareholders 1 euro a share on Feb. 10, handing out part of its 830 million euros ($1.15 billion) of net cash.

The payment will benefit Hermes family shareholders who control 73 percent of the group, as well as arch-rival LVMH (LVMH.PA), which has built up a stake of more than 20 percent and caused alarm among Hermes management and family members.

In an interview with Challenges magazine published on Thursday, Hermes Chief Executive Patrick Thomas said of LVMH: "We are absolutely not compatible. LVMH can be a shareholder of Hermes without wanting to take control. But 20 percent and more, it is too much."

LVMH is expected to publish strong full-year results on Friday, benefiting from the global luxury rebound in 2010 and voracious demand from Asian shoppers at home and in tourist hotspots in Europe.

Fourth-quarter sales rose 25.3 percent to 736 million euros, or 16.7 percent excluding currency effects.

Hermes enjoyed its strongest growth in the United States, where it is building up its presence, with sales up 25 percent. Revenue in Asia and Europe rose 16 percent.

"Hermes' fourth-quarter sales growth figure is 4 percentage points higher than my forecast, confirming the strong trends reported by peers in recent weeks," said Rogerio Fujimori, an analyst at Credit Suisse in London.

Overall in 2010, total revenue rose 25.4 percent to 2.4 billion euros, up 18.9 percent, excluding currency effects.

Based on Thomson Reuters I/B/E/S calculations, expectations for Hermes 2010 sales stood at 2.361 billion euros.

"The results are very good; Europe is particularly impressive, and silk sales are higher than expected," said one Paris-based analyst.

Shares in Hermes were down 0.27 percent at 149.80 euros at 0853 GMT, outperforming the Paris bourse blue-chip index .CAC40, which was down 0.9 percent.

EXPANSION

Hermes opened 13 shops during the year, including four in China and a flagship outlet in Paris dedicated to the home. It also renovated or expanded nine shops. It plans to open 10 outlets in 2011.

Hermes said it expected its 2010 operating margin to rise by 3 percentage points against 2009 and report a more than 40 percent rise in pretax profit.

The strong results come after Swiss luxury group Richemont (CFR.VX), British handbag maker Mulberry (MUL.L) and Italian leather goods group Tod's (TOD.MI) reported buoyant Christmas trading and expressed optimism about 2011.

British luxury brand Burberry (BRBY.L) said it expected full-year profit to be at the top end of expectations.

Hermes shares, which gained 68 percent in 2010, have lost nearly 4 percent since Jan. 1 as the luxury sector has undergone a re-rating on fears of Chinese demand overheating and concerns about currency impacts.

($1=.7224 Euro)

(Editing by Greg Mahlich and Will Waterman)

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