LSTR shifts balance but airport skew to rise

By Kevin Rozario |

LS Travel Retail told investors yesterday that it was moving its business portfolio and products categories to a more balanced mix by 2016 – but, in contrast, it will further skew its operations to airports.


The duty free and travel retail operator, owned by French multinational Lagardère plans to reduce its reliance on Travel Essentials from a 55% share in 2011 to an estimated 40% by 2016 while pushing up Foodservice from 5% to 15% and Duty free & Luxury from 40% to 45%. The end result is a better weighted portfolio (see below).



However, when it comes to distribution channels, LSTR is willing to put more of its eggs in the Airports basket moving the share from 55% in 2011 to 68% by 2016. This means that Stations as a share of the business will fall from 24% to 16% in the same period and while other channels will slip from 21% to 16% (see below).



By the end of this year, the company also hopes to rebalance its product mix – the main beneficiaries being Fashion, which will rise from a 5% share in 2011 to 11% this year; and F&B which will move from 7% to 17% over the same period. Losing the most share will be the Tobacco and Print categories (see below).



With sales of €2,252m ($3,060m) last year, LSTR generated more revenue than its sister Lagardère Services division, LS Distribution, which generated €1,493m ($2,029m). Between 2011 and 2013, LSTR grew by +13% whereas LS Distribution declined by -14%, and the latter is in line for a disposal.


Lagardère says: “LS Distribution requires investments Lagardère Services is not ready to consent (to) since its strategic focus is travel retail. Lagardère Services initiated a process in 2013 to find investors willing to support this project.”


With LS Distribution out of the way, Lagardère expects a €50m impact on recurring Ebit, but LS Services will become a pure-play DF&TR operator with growth continuing through both internal growth and acquisitions.


As a result, revised guidance given yesterday for the period 2013 to 2016 is sales growth of +5% to+10% per annum while the Ebitda margin is expected to rise by +1.0pts over the period from 4.9% in 2013 (see below).



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