TR stands out in a flat year for Lagardère

By Kevin Rozario |

French media company Lagardère Group, saw flat like-for-like sales (down -0.2%) last year to €7,370m ($9,871m) – but sharply bucking the downward trend was duty free and travel retail which saw its like-for-like sales jump by +8.2%.


Lagardère – the owner of LS Travel Retail – says that the development strategy for growing business lines such as Digital and Travel Retail “bore fruit, offsetting a still-difficult economy”.


In terms of reported sales, the company’s decline was steeper at -3.7%, the difference Lagardère says is primarily down to “a negative scope effect of -€392 m” caused by the 2011 disposals of International Magazine Publishing (PMI) and Radio activities in Russia plus, to a lesser extent, Relay’s businesses at Paris and Lyon airports now being consolidated using the equity method. A positive foreign exchange effect of €119m partially offset this.


Among Lagardère’s four divisions, Lagardère Services – which includes LSTR’s operations – was the only one to show a like-for-like gain in 2012 (up +2.2%). The others were down by between -1.2% and -5.9% (see table below).

Lagardère Services’ net sales of €3,809m in 2012 (+2.3% reported and +2.2% like-for-like) were strongly supported by LSTR’s +8.2% sales growth which was more pronounced in France (+15% for Aelia) and Central Europe (+14.8% in Poland, +16% in Romania, +22.5% in Bulgaria). The UK was up by +10.7% and Germany by +8.8%.


Asia grew by +32.5%, but it was tempered by weakness in the Australasia region, generating overall growth in Asia Pacific of +7.2%. The company said that North America “was down slightly” due to an unfavourable economy but it did not reveal by how much.


By Q4, travel retail accounted for 58% of Lagardère Services’ total sales, up from 53% in the equivalent quarter a year earlier. In Q4 2012, LSTR continued its development with the acquisition of the duty-free business in the Rome airport system (a 14-year contract). The other 42% came from the LS Distribution (integrated retail and distribution) business.


During Q4, LSTR posted +18.2% growth, thanks to acquisitions as well as a solid performance of existing activities (like-for-like sales were up +7%). This growth was driven by airport business, specifically in France (+8.6%) and Central Europe (+8.1% in Poland and +10.1% in the Czech Republic. Business in Asia climbed +30.5% thanks to new concepts in Singapore and new concessions gained in Malaysia.


Distribution was down -4.5% due to the structural decline in print products.



At Lagardère Group’s annual results presentation yesterday, analysts expressed a great deal of interest in Autogrill’s potential demerger of its F&B and travel retail businesses – and the attraction of this latter business (ie World Duty Free Group) to Lagardère through joint venture or otherwise.


Lagardère made it clear that working in joint venture was not a general company strategy it wished to pursue. Commenting specifically on Autogrill, Dag Rasmussen (left), Chairman and CEO of Lagardère Services, added: “Travel retail is a consolidating market and Autogrill could be a great opportunity. But there are no specific talks between Autogrill and ourselves right now.”


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