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Amid profits comes battle at French luxury companies

Family-controlled Hermes will be relieved that it notched up a 25% growth in sales in 2010 as it will bolster its defence from the predatory arch rival LVMH.  

In a statement, the Paris-based company said that full-year sales increased to €2.4 billion from €1.9 billion the previous year. The growth was attributed to strong business in all regions, with sales in America and Europe recording growth of 25% and 16% respectively.

This news comes at a good time for the company which has been trying to ward off an attack from rival LVMH, headed by Bernard Arnault. Late last year LVMH built a 20% stake in Hermes.

But Hermes' relief is likely to be short-lived. On 4 February, a day after it announced its sales figures, Arnault (pictured) said he will no longer remain a silent partner or a passive shareholder in Hermes. He also added that he would not be selling his stake in Hermes. Arnault had said last year that he had no intention of taking over the company.

He might have been buoyed by excellent results at LVMH, which reported a 73% rise in net profit for 2010, to €3.03 billion from €1.76 billion the year before.

In a statement Arnauld said: "2010 was a great vintage for LVMH. The quality of our products, the originality of our brands and the talent of our teams bolstered by the economic recovery allowed us once again to gain market share throughout the world."

Both Hermes and LVMH are family controlled luxury goods companies. Hermes was founded in 1837 by Thierry Hermes and the family currently holds a 73% stake in the business. Family member Bertrand Puech serves as executive chairman, while non-family Patrick Thomas is CEO.

Paris-based LVMH began in 1987 with the Arnault family owning a 47% stake in the company through the family's holding company, Groupe Arnault.  

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