Hermes International SCA rose in Paris trading on speculation the luxury-goods company’s founding family may be more willing to sell following the death of former President and Chief Executive Officer Jean-Louis Dumas.
Hermes rose 2.02 euros, or 2 percent, to 101.65 euros, valuing the company at 10.7 billion euros ($14 billion). Dumas, who led the maker of silk ties and saddles for nearly three decades, died May 1, aged 72, Hermes said.
“Some people may believe that the other family members will now be more willing to sell,” Antoine Belge, an analyst at HSBC in Paris said today by telephone. “We think the descendents of the founder are still committed to keeping the company independent, especially the fifth-generation members who still control the majority of the voting rights.”
“There is no change in the Hermes family’s attachment to the company,” Christel Denef a spokeswoman for Paris-based Hermes said in an e-mail. About 74 percent of Hermes stock is held by the family.
Since Dumas retired in 2006, Hermes’s share price has been buffeted by speculation luxury rivals LVMH Moet Hennessy Louis Vuitton SA or Cie. Financiere Richemont SA might make a takeover bid. Most recently, LVMH Chairman Bernard Arnault was weighing the sale of drinks unit Moet Hennessy to fund a possible bid, The Financial Times reported last April. LVMH denied the reports at the time.
Hermes, whose Kelly handbags retail from around 4,000 euros, is trading on an estimated price-earnings ratio of 32.4 compared with 19 for LVMH and 22 for Richemont, according to data compiled by Bloomberg.
Sonia Fellmann, a spokeswoman for LVMH, did not immediately return calls seeking comment. Alan Grieve, Richemont’s corporate affairs director, wasn’t immediately available to comment.
The Hermes family has “no plans to sell and nothing is going to happen in the short to medium term,” Patrick Thomas, who succeeded Dumas as sole CEO in 2006, said in a March interview. Thomas, the first non-family member to run the 173-year-old company, said last May there would be no sale of a majority stake while the fifth and sixth generations of the family were in control.
Hermes’s operating profit margin was 24.2 percent in 2009, data compiled by Bloomberg show. LMVH’s was 19.7 percent while Richemont’s was 18.1 percent in the year ended March 2009.
Dumas’s death “shouldn’t change at all the family’s attachment to the group and its desire to stay in control,” Loic Morvan and Cedric Rossi, analysts at Aurel BGC in Paris wrote in a note today.
Members of the Hermes family sit on the executive committee and supervisory board. They include deputy managing director Guillaume de Seynes, artistic director Pierre-Alexis Dumas and Jerome Guerrand, chairman of the supervisory board. Another relative, Bertrand Puech, chairs Emile Hermes SARL, which represents the family shareholders.
Dumas led Paris-based Hermes from 1978 until his retirement in 2006, when he was succeeded by Thomas. During his tenure as CEO, Dumas, who had previously worked as an assistant buyer for U.S. department store Bloomingdales, expanded Hermes’s product range and retail network and bought stakes in manufacturers such as Swiss watch-movements maker Vaucher Manufacture Fleurier and British shoemaker John Lobb. Hermes listed on the stock exchange in 1993.
Dumas, who remained honorary executive chairman of Hermes until his death, is survived by his daughter Sandrine, and son Pierre-Alexis. A funeral service for Dumas will be held May 7 at 3 p.m. in Paris, Hermes said.
Hermes posted net income of 288.8 million euros and revenue of 1.9 billion euros in 2009, the company said March 5. Hermes was founded in 1837 by Thierry Hermes as a maker of harnesses and saddles.