PARIS — Underscoring luxury’s rebound, sales at Hermès International surged 18.5 percent in the first quarter to 507.7 million euros, or $703.5 million, versus 428.4 million euros, or $560.3 million, in the year-ago period.

This story first appeared in the May 7, 2010 issue of WWD. Subscribe Today.

“I think many of our customers see the Hermès object more as an investment than an expense,” said Patrick Thomas, chief executive officer at the French firm. “Even fashion is recovering. All in all, we are enjoying a nice period.”

April sales have been in line with the first-quarter trend, he added.

However, Thomas cautioned the company would encounter more challenging comps in the second half, and is forecasting a sales bump of at least 5 percent for the full year.

In the three months ended March 31, Hermès trumpeted a solid performance in its own stores — up 26 percent at constant exchange rates — and double-digit gains across key product categories. Sales of leather goods jumped 20.4 percent; ready-to-wear and fashion accessories 16.8 percent, and silk and textiles, 14.8 percent. Thomas noted belts, fashion jewelry, women’s shoes and men’s ready-to-wear were among standout categories.

Wholesale revenues rose sharply, reflecting an end to de-stocking in perfumes, up 38.1 percent and fanned by the success of the new scent Voyage d’Hermès, and watches, up 35.8 percent.

Dollar figures are converted from euros at average exchange rates for the periods to which they refer.

The French luxury firm cited a solid uptrend throughout Europe, up 14.8 percent in the quarter, and impressive gains in other regions at constant exchange rates, with the Americas up 25.2 percent and non-Japan Asia up 46.6 percent. In Japan, sales slipped 1.8 percent.

A comeback in the Americas was underscored by a strong consumer reaction to the brand’s first dedicated men’s store, which bowed on Madison Avenue in New York last February. The bespoke department — for suits, jackets and even shirts — has been particularly successful, Thomas noted, saying: “It’s beyond our expectations.”

The first-quarter results bested analysts’ expectations and outpaced Hermès’ luxury peers.

“Thanks to its classical positioning, Hermès should continue to benefit from the current move away from conspicuous consumption,” HSBC luxury analysts Antoine Belge wrote in a research note Thursday.

The firm’s strong showing “reiterates the positive momentum that the luxury industry is experience,” noted Evolution Securities analyst Dennis Weber, predicting the figures should boost the stocks of Burberry and particularly LVMH Moët Hennessy Louis Vuitton, which has a similar product focus and price range.

Weber also dismissed speculation that the death last Saturday of former ceo and family patriarch Jean-Louis Dumas, whose funeral is scheduled for today, might increase the likelihood of a takeover. Evolution upgraded the stock from “sell” to “reduce,” spying only limited downside.

Long of the opinion that the effects of the global financial crisis would be lasting, Thomas reiterated a cautious stance for the balance of the year, with the Greek debt crisis among uncertainties on the horizon. He noted that economic gyrations have “a very strong impact on the psychology of our customers….I’m not overconfident for 2010.”

Hermès said it plans to renovate 11 stores this year and open 13 new ones, including a new flagship on Paris’s Left Bank.

Shares in Hermès rose 0.1 percent Thursday to close at 99.30 euros, or $128.13, on the Paris Bourse.

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