Although Arnault has said he is not seeking full control of the maker of Birkin handbags and silk scarves, Hermès has vowed to protect itself from what it considers an unwelcome suitor.

This story first appeared in the May 31, 2011 issue of WWD. Subscribe Today.

LVMH vice chairman Pierre Godé took to the floor at the Hermès annual meeting to formally refute Puech’s charges.

“Contrary to any impression given elsewhere, LVMH has never sought to destabilize the Hermès family nor the company’s staff nor suppliers. I challenge those who assert otherwise to produce a shred of evidence — for the avoidance of doubt, there is none,” Gode said.

“LVMH directors are rational and lucid people. From the outset we understood that there was no possibility of controlling Hermès because the family shareholders spoke for 70 percent of the company,” he added.

“That aside, it would make no sense for LVMH to destabilize Hermès as it would risk compromising the success of this great company. The more this company prospers, the happier we all are as shareholders,” Godé added.

Puech reacted to the comments with skepticism, saying recent facts spoke for themselves.

“In the last six months, there have been attempts to undermine us, the likes of which we have not known in 174 years,” he said, referring to the founding date of Hermès in 1837.

Recent media reports suggested a crack was appearing in the family’s unity after Puech’s brother, Nicolas Puech, told a French newspaper he thought it was not a good idea to lock up all the family’s shares in a nonlisted holding group in order to protect the firm from a takeover bid by Arnault.

Bertrand Puech said the comments had been misinterpreted and his brother stood united with the other family members.

Minority shareholders also stepped into the debate at Monday’s meeting, with one accusing LVMH of being “deceitful” and “hypocritical,” prompting Godé to demand an official sanction.

“I cannot accept remarks which are purely slanderous and insulting, including those made at a general assembly,” he said in a heated exchange during the annual meeting.

“I expect the board to police the proceedings. The least you could do, and this is what we do at LVMH, is to guarantee a certain level of courtesy in the debate,” he said, to boos from other shareholders.

Puech reiterated the family’s intention of maintaining the company’s independence, with a representative of the company’s works council raising a hand to voice support during the lively question-and-answer session.

The Dumas, Puech and Guerrand families collectively own more than 70 percent of the shares in Hermès International, a limited partnership structure that guarantees they keep control of management. Still, they want to reinforce that by grouping more than 50 percent of the capital into the nonlisted holding company.

The move has been green-lighted by the AMF, but minority shareholders are seeking to have the ruling overturned. A French appeals court is due to rule on Sept. 15 on the appeal filed by the French Association for Minority Shareholders, or ADAM.

The association failed in a separate attempt to get a commercial court to waive the family’s voting rights ahead of the shareholders’ meeting. Hermès had called the request “groundless” and accused ADAM of attempting to pass control to LVMH only a few days after Hermès reported what it described as “the best results in the sector.”

Sales at Hermès jumped 25.5 percent in the first quarter to 637.1 million euros, or $870.8 million, as reported.

Hermès ceo Patrick Thomas said at Monday’s shareholders’ meeting that prospects for the luxury sector remained good, fueled by strong demand from emerging luxury consumers in China.

“Luxury in general has good prospects for development over the next three to five years at the very least,” he said.

Thomas said Hermès was also expanding in other parts of Asia, with plans to open a 3,800-square-foot store in Mumbai in mid-June and another in Almaty, Kazakhstan, in the next few months.

In Japan, growth has ground to a halt following the March 11 earthquake and tsunami, but Thomas said this should not have a significant impact on the company’s prospects for 2011 as a whole.

Meanwhile, the annual report detailed that sales at Jean Paul Gaultier rose 5 percent last year to 24 million euros, or $31.5 million at average exchange rates. Earlier this month, Spain’s Puig acquired the 45 percent of Gaultier held by Hermès and roughly 15 percent from the founding couturier, as reported.

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