March 19 (Bloomberg) -- Hermes International SCA reported profit that beat analysts’ estimates, raised its dividend and vowed to keep opening stores as demand for the French luxury label’s Birkin and Kelly handbags resists the recession.

Net income for 2008 rose less than 1 percent to 290.2 million euros ($391.5 million), the Paris-based company said today, as the higher yen and dollar boosted the value of sales outside Europe. That beat the 287.5 million-euro median estimate of 12 analysts compiled by Bloomberg News. Sales at the Paris- based company’s own stores rose in January and February.

Chief Executive Officer Patrick Thomas told Bloomberg Television today that he won’t change strategy or cut spending on new stores amid the economic crisis. He also repeated his outlook for unchanged sales this year. Hermes, whose Kelly bags cost at least 4,000 euros, jumped as much as 7 percent in Paris trading, cutting its drop this year to 25 percent.

“The beginning of the year was not that bad given the economic environment,” said Antoine Belge, an analyst at HSBC in Paris who has a “neutral” rating on the stock. “People are a lot less pessimistic.”

Hermes will pay a dividend of 1.03 euros a share, up from last year’s 1 euro. Fourth-quarter sales rose 6.2 percent at current exchange rates, Hermes said, without giving a figure.

Earnings from luxury companies this quarter have been mixed as some brands’ appeal persists in the downturn, while others suffer. LVMH Moet Hennessy Louis Vuitton SA and PPR SA, the owner of Gucci, both jumped when their figures, released in February, indicated demand was holding up. Rome-based jeweler Bulgari SpA, by contrast, tumbled after saying profit shrank.

Shares Rise

Hermes added 2.77 euros, or 3.9 percent, to 74.66 euros in Paris trading.

In January and February of this year, sales at Hermes stores increased at constant exchange rates, while revenue at third-party retailers declined, Hermes said in its statement. Hermes didn’t provide figures for sales so far this year.

“We are not measuring our performance in terms of market share,” said Thomas. “We are focused on a value strategy and will continue to open new stores, particularly in Asia outside Japan.”

Thomas aims to at least maintain sales in 2009 and plans to open or renovate more than 20 stores, mainly in Asia and the U.S. Total sales rose 8.6 percent to 1.76 billion euros, nearly matching the 1.77 billion-euro median of 16 analysts’ estimates.

Japanese Sales

Hermes gets about a quarter of its revenue from Japan and about 15 percent from the Americas, according to 2007 figures. The yen gained 29 percent against the euro last year, while the dollar rose 4.4 percent versus the European currency.

“Strong brand equity, high customer loyalty, stable revenue from timeless signature products, tight cost management and net cash make Hermes the most defensive in the sector,” London-based UBS AG analyst Yasuhiro Yamaguchi said in a March 9 research report. He has a “neutral” recommendation on Hermes.

Sales in the 175 billion-euro luxury goods industry may fall 3-7 percent this year, excluding currency effects, according to consulting firm Bain & Co.

Hermes invested 160 million euros last year in boosting production capacity and expanding its retail network. The luxury goods maker also increased its stake in Jean-Paul Gaultier, the company of the designer who also creates Hermes’ women’s wear, to 45 percent from 35 percent.

Sales growth last year was led by leather goods, which rose 14 percent. Geographically, the strongest growth came from Asia, excluding Japan, where sales rose 22 percent. Hermes opened eight stores in the region, including three in China.

To contact the reporter on this story: Sara Gay Forden in Milan at sforden@bloomberg.net.

Last Updated: March 19, 2009 15:58 EDT