The company is due to go public on 3 June, when it will float part of its equity on the second market in Paris. It will be a traumatic step. After 156 years, the firm is still dominated by three branches of the founding family, who own 86 per cent of the stock.
Jean-Louis Dumas, chairman, said: 'We took this decision to respect the promise we made four years ago, and to allow family and institutional shareholders to realise their capital.'
The initial public offering is predictably low-key. Share capital is to be increased by 4 per cent while institutional investors will sell a further 14 per cent stake on the market.
The family will continue to own 81.4 per cent. The offer price is likely to be around Fr13,000 ( pounds 1,600) a share, giving a price-earnings ratio of 30.
The news has aroused intense interest in Paris. Hermes is a French institution with a history that makes even Yves Saint Laurent and Chanel seem like newcomers.
At 24 Faubourg Saint-Honore, company headquarters, it is tempting to believe that little has changed since the 1950s, when Grace Kelly gave her name to the box calf bags. The house of Hermes knows the value of its heritage, dating back to Thierry Hermes' horse harness business, founded in 1837. The message is continually reinforced by the positioning of equestrian memorabilia around the stores and the publication of a biannual glossy magazine, Le Monde d'Hermes.
However, in recent years, Hermes has felt the chill running through the international luxury goods market. After consistently strong growth throughout the Eighties, turnover stagnated - Fr2.45bn in 1990, Fr2.4bn in 1991 and Fr2.45bn in 1992. Net profits dipped from Fr168m in 1990 to Fr121m in 1991 before rising again to Fr176m last year.
French analysts believe the firm is poised for steady growth. Mr Dumas predicts a 10 per cent rise in sales this year after an encouraging first quarter. Three new shop openings, in Berlin, Bologna and Barcelona, are scheduled, bringing the total number of company-owned stores to 59.
It seems that Hermes has weathered a turbulent period rather more successfully than other names in the luxury goods market. Much of the credit goes to Mr Dumas, chairman since 1978, who has overseen the company's international expansion.
Mr Dumas, 55, a fifth-generation member of the family, is a much-admired polymath, equally at home scanning the pages of Les Echos, the financial daily, or discussing the merits of the latest winner of the Prix Goncourt, the literary prize.
He insisted that Hermes self-fund its growth during the rapid expansion of the 1980s. This policy affected margins, but today the company's debt is negligible.
The chairman was also wise to avoid the lure of licensing. Hermes makes almost all of its products itself, and quality control is strict.
Its products do not come cheap. A tie sells for pounds 59, a 90cm square of printed silk for pounds 135, a Kelly bag for pounds 1,690. Even so, in the run-up to Christmas the flagship store in the Faubourg Saint-Honore sells scarves in up to 35 colourways at the rate of three a minute. Sales of printed silk scarves and ties account for more than 30 per cent of turnover.
Hermes also sells leather goods, watches, jewellery and perfumes. Recently, clothing has come to the fore. Claude Brouet, a former editor of Marie Claire, has revamped the women's wear range, while Veronique Nichanian, a designer formerly with Cerruti, has transformed menswear.
Mr Dumas dismisses the current problems affecting the luxury goods market as no more than cyclical. But he speaks from a position of strength.
Hermes has struck a delicate and rare balance, refusing to cut corners on quality while maintaining sound financial controls. Many companies are having to sacrifice elements of the former to maintain the latter.
The avoidance of licensing deals may prove the master stroke. Other long-established firms, which have lost precious cachet by ill-considered licensing ventures, may not face the future with equal confidence.
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