Hermès' long-term development strategy did not prevent the company from reaching an operating margin of 31.2 percent of sales in 2011, the highest level since it went public on the Paris stock exchange in 1993 and 3.4 percentage points above 2010, but the management said yesterday that it will not be able to do better this year. The consolidated net income jumped by 40.9 percent to €594.3 million, thanks in part to a capital gain of €29.5 million from the sale of its stake in the fashion house of Jean Paul Gaultier.

As previously reported, the French luxury goods company's sales grew last year by 18.3 percent in euros as well as in local currencies to €2,841.2 million, with increases in all the business segments and in all geographical areas through the end of 2011. Retail sales rose by 19 percent and wholesale revenues by 15 percent, and the trends remained positive in the first months of this year. Most of the growth was in terms of volumes as the company raised its average selling prices by only 1 percent last year. It will raise them by an average of 3 percent for 2012.

The operating cash flow for the year totaled €722.8 million. It allowed the group to finance investments of €214.4 million, mainly for the development of its retail network and its production capacities, as well as dividends of €167.3 million and the buyback of €286.0 million worth of shares to fend off a possible takeover by LVMH. Net cash increased by €210 million to reach a very comfortable level of €1,038 million.

In the past year, Hermès opened 13 new stores, converted four concessions and renovated or extended eight other stores. The company said it will invest in the opening or renovation of an additional 15 stores this year, but the pace of new openings will slow down to three, including a flagship store with an in-house restaurant in Shanghai. It will also open new stores in Beijing and Paris under its Chinese Shang Xia brand. Its first store under this banner, opened in Shanghai in 2010, had sales of around €2 million in 2011.

Hermès will continue to invest in new production capacities in order to meet the growing demand for its products. It plans to open two new leathergoods factories in France, and to hire at least 600 more people, more than half in production.

In view of its high cash pile, Hermès will propose to pay a high dividend of €2 a share, up from €1.50, as well as an exceptional onetime dividend of €5 a share. The high dividends, which will involve total outlays of around €740 million, will please Hermès family shareholders, who own more than 70 percent of the company, as well as LVMH, which has accumulated a stake of 22.28 percent in the company, but replying to one of its offers, Patrick Thomas, president and chief executive of Hermès, said that no synergies will be possible with the group of Bernard Arnault, as their visions are different.

The company's statement said that Hermès will continue to “take its time.” In fact, this year's theme will revolve around “the gift of time.” “This time, which is so precious, calls for the dexterity and skill of our saddlers, the meticulousness of our watchmakers, the virtuosity of our engravers, and the passion for quality shared by all our craftsmen and designers,” said the company. “Without it, nothing beautiful or sustainable could be produced.”