PARIS — Hermès International keeps hammering home that its single largest nonfamily shareholder, LVMH Moët Hennessy Louis Vuitton, is about as welcome in its company as a counterfeit Birkin.

This story first appeared in the June 5, 2013 issue of WWD. Subscribe Today.

Speaking at its annual general meeting here Tuesday, Hermès International chief executive officer Patrick Thomas alleged LVMH arrived at its sizable Hermès stake in a “fraudulent” way — ratcheting up the rhetoric in the ongoing dispute between the French luxury rivals.

Asked by one shareholder how Hermès accounted for a recent declaration by LVMH chairman and ceo Bernard Arnault that he came into the holding unexpectedly, Thomas said “either LVMH is disorganized” for not knowing how it came to amass its initial 17.1 percent stake — yielding more than a billion euros, or $1.3 billion, in capital gains — or Arnault did not tell the truth.

“I’ll let you decide,” he said.

Speaking at LVMH’s annual meeting last April, Arnault said: “You know, we found ourselves owning shares in this company…unexpectedly. We had not planned to be shareholders in this firm. We made a financial investment, and that financial investment had an outcome that we had not expected.”

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LVMH surprised markets by revealing in October 2010 that it had amassed a large stake in Hermès via cash-settled equity swaps that allowed it to circumvent the usual regulations requiring firms to declare share purchases. As of Dec. 31 last year, the firm had raised its stake to 22.6 percent.

Thomas applauded the French market authority’s recommendation, following a hearing of its sanctions committee on Friday, that LVMH pay the maximum fine of 10 million euros, or $13 million, for dissimulating its intentions.

The bespectacled executive lamented that LVMH benefited from a capital gain that “could have been in the pockets of other Hermès shareholders.”

Asked why family-controlled Hermès does not consider taking the company private, as Groupe Clarins did in 2008, Thomas said it would be a daunting financial undertaking to purchase 28 percent of a company with a market capitalization of 23.9 billion euros, or $31.07 billion, as of Dec. 31.

“If you have such means, we’d love to speak to you afterwards,” he told the questioner, eliciting chuckles from the audience gathered in the vast auditorium of the Palais des congrès, with its folding seats the color of Hermès shopping bags.

At the meeting, Axel Dumas, a sixth-generation family member, was named co-ceo, effective today, clearing the way for the 42-year-old to take the management helm when Thomas, 65, retires in early 2014.

A graduate of elite Paris school Sciences Po and Harvard University, Dumas started his career at BNP Paribas in China and the U.S. before joining Hermès in 2003, then helmed by his uncle, Jean-Louis Dumas. He was managing director of jewelry and leather goods before being named chief operating officer in 2011.

Quizzed about his attitude towards LVMH, Dumas said he shared the opinion of Thomas that its investment was neither “desired, nor desirable.”

At last month’s hearing of the market authority, the Autorité des Marchés Financiers, or AMF, LVMH had portrayed its stake building as opportunistic, and accused Hermès of launching a damning media campaign against it, coloring the proceedings.

The authority’s enforcement committee is to reveal its final decision no later than July 31.

Last year, Hermès grouped family-owned shares into a nonlisted holding company to gird it against further advances by LVMH.

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. The H51 holding company groups 50.2 percent of the firm’s capital and has priority purchasing rights on the remaining shares held by the family members participating in the initiative — some 12.6 percent of capital.

At Tuesday’s meeting, Hermès executives applauded an appeals court decision last week that upheld its right to form the nonlisted holding without launching a public offer for all outstanding shares. A body representing independent shareholders had challenged its formation.

Thomas held out hope that LVMH vice president Pierre Godé would make good on his word when he told the AMF hearing on Friday that he would not “rule out” shedding some of the luxury group’s Hermès stake.

Towards the end of the meeting, Thomas received sustained applause from the audience for his long contribution to the company’s success. He took the management helm in 2004. An Hermès veteran, he rejoined the firm in 2003 from William Grant & Sons Ltd., the manufacturer of Glenfiddich whisky, where he had been ceo since April 2000. He left Hermès in 1997 to join Lancaster Group as president and executive vice president of its parent, Coty Inc. He initially joined Hermès as managing director in 1989 after a long career at the Pernod Ricard Group.

Marking its 20th anniversary as a public company this year, Thomas flashed slides showing that Hermès revenues multiplied by eight times and net profits 23 times over the period. Sales catapulted from 435 million euros in 1993 to 3.48 billion euros at the end of 2012, while net profits leaped from 32 million euros in 1993 to 740 million euros last year.

The operating margin advanced from 14.2 percent at the time of the initial public offering to 32.1 percent last year, a historic record for the firm.

The share price, meanwhile, rose from 5.08 euros in June 1993 to 226.30 euros at the end of last year, and the company’s market capitalization went from 600 million euros 20 years ago to an estimated 23.9 billion euros today.

Its network of company-owned stores grew from 59 locations two decades ago to 205 today.

Echoing the tactic of other luxury players, Hermès plans to slow its global retail rollout in the wake of slowing Chinese consumption and a morose environment in Europe. “Quality, not quantity,” Dumas stressed.

This year, Hermès plans to open only two new stores, while renovating and expanding 13 locations.

In response to a shareholder question about antirich sentiment in France, Thomas lamented that fewer French people were able to afford luxury goods. He said French nationals account for only 5 to 6 percent of the company’s turnover. However, Dumas noted that Hermès welcomed more French clients in its stores ahead of the holiday gift-giving season, while allowing that they purchased less expensive items than in the past.

Reviewing its 2012 performance, Dumas noted that jewelry was the fastest-growing category, with sales vaulting more than 50 percent. By region, Asia-Pacific was the star performer, propelling it to represent 32 percent of total sales.