PARIS — Hermès International had a very good year — and LVMH chief Bernard Arnault is richer for it.

This story first appeared in the February 4, 2011 issue of WWD. Subscribe Today.

Reporting a 25.3 percent jump in fourth-quarter sales, Hermès said it would pay an interim dividend of 1 euro per share on Feb. 10 due to strong growth and a cash pile that stood at 830 million euros, or $1.15 billion, at the end of 2010 — more than double the size of a year ago.

That amounts to 21.3 million euros, or $29.4 million at current exchange rates, for Arnault’s LVMH Moët Hennessy Louis Vuitton, which accumulated a 20.2 percent stake in Hermès late last year. Arnault has said repeatedly he is not seeking control of Hermès or a seat on its board. But the market will be listening closely for fresh signals of his intentions today, when he hosts a press conference to disclose LVMH’s fourth-quarter results.

The world’s largest luxury conglomerate is also expected to detail its intentions for Hermès dividends. Under French accounting rules, companies are allowed to declare up to 20 percent of dividends from share investments as earnings.

On Thursday, Hermès released only revenue figures, but said it would report a more than 40 percent jump in net profits before taxes, and a current operating margin that widened by about 3 percent, above previous forecasts of a 1 percent to 2 percent bump, when it releases full results on March 4.

Underscoring the luxury sector’s robust health, the maker of Birkin and Kelly bags posted sales of 736 million euros, or $1 billion, in the three months ended Dec. 31, versus 587.3 million, or $867.5 million, in the same period in 2009, powered by lusty demand for leather goods, silk scarves, perfumes and watches. Dollar figures are converted from euros at average exchange rates for the periods to which they refer.

In 2010 as a whole, sales totaled 2.4 billion euros, or $3.19 billion, up 25.4 percent year-on-year in reported terms and representing an increase of 18.9 percent at constant exchange rates. The French luxury firm raised guidance several times last year, most recently setting a target of 15 percent sales growth at constant exchange rates for 2010.

In an interview on Thursday, Mireille Maury, managing director for finance and administration at Hermès, trumpeted an “excellent year” and forecast a sales increase of 8 to 10 percent for 2011.

She would not pinpoint January trends, saying only that “sales are good. We are facing the new year with confidence.”

Hermès plans to bump up investments in 2011 — to about 220 million euros, or $304.1 million at current exchange — for its workshops and its retail network, adding 10 new boutiques and renovating 14, Maury said. Mumbai, Rome, Geneva, Las Vegas and Short Hills, N.J., are among cities slated for new boutiques, with China allotted two to three more. A Maison Hermès, housing the brand’s complete product universe, is to open in Shanghai in 2013, she noted.

Maury touted double-digit gains across all product categories and all regions except Japan, where 2010 sales edged down 0.1 percent at constant exchange rates.

In the fourth quarter, sales advanced 30.9 percent at constant exchange in Asia-Pacific, and 25.4 percent in the Americas. “The United States has been very dynamic for us since last year,” Maury commented, highlighting an above-plan performance for its new men’s-only unit on Madison Avenue in New York.

Asked if its war of words with LVMH had any impact, Maury said neither its results nor its strategy wavered.

Hermès executives and family shareholders view the LVMH investment as hostile, and its culture — which prizes craftsmanship above all — as incompatible with its luxury rival.

In an interview published Thursday in French business magazine Challenges, Hermès chief executive officer Patrick Thomas is quoted as saying, “LVMH can be a shareholder of Hermès without wanting to take control. But 20 percent and more, it is too much.”

Family shareholders at Hermès have decided to group 50.2 percent of their capital into a nonlisted holding company in order to fend off a potential takeover bid by LVMH. The move has been green-lighted by France’s stock market regulator AMF, but is being appealed by minority shareholders.

Shares in Hermès fell 0.6 percent Thursday to close at 149.30 euros, or $206.34 at current exchange, on the Paris Bourse.

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