Lagardère Travel Retail wrapped up the purchase of Belgian travel retailer IDF in September.

Accelerated growth of +6.3% on a like-for-like basis (+16.1% consolidated) pushed Lagardère Travel Retail sales to €4,264m/$4,775m in 2019, full-year results show.

The result benefitted from a favourable 5.8% jump in like-for-like revenue (+17.8% consolidated) in the fourth quarter to €1,117m/$1,251m, fuelled by dynamic performances in EMEA (excluding France), China and North America.

Asia Pacific again proved lucrative in full-year 2019, with a 7.2% increase in business borne out of growth in China (Mainland and Hong Kong), which has reaped the benefits of new openings and modernisation activities over the past couple of years.

EMEA grew by 6.9%, spurred on by duty free and travel essentials operations at airports in Rome, Venice and other regionals, plus Romania, Spain and Portugal.

Dag Rasmussen, Chief Executive Officer, Lagardère Travel Retail.

DYNAMISM ACROSS BUSINESS LINES

Ongoing expansion in Africa and a buoyant performance in the Middle East coupled with a 2.9% lift in the North America business reflected strong travel essentials and foodservice operations, in spite of the impact on Canadian airport traffic owing to US-China trade tensions.

On the other hand, higher growth for the travel retailer was offset by political unrest due to strikes and rioting in France and Hong Kong, respectively, and a contraction in business in the Pacific.

This was linked to sluggish economic growth in Australia and an unfavourable network effect despite the full-year effect of new openings in Christchurch, New Zealand.

In a circulated statement, Dag Rasmussen, CEO, Lagardère Travel Retail praised another strong year for the travel retailer, which he put down to the good performance of its existing operations and the addition of four new markets in the global network.

Successful integrations of Hojeij Branded Foods (acquired in 2018) and Belgium’s International Duty Free (2019) also contributed towards the result.

Click to enlarge. Source: Lagardère Travel Retail.

“We consolidated our number one position in travel essentials with strong sales dynamic on existing stores thanks to our constant anticipation and adaptation to customers’ needs, and the successful expansion of our network in Gabon and Turkey,” commented Rasmussen.

“Induty free & fashion, we have continued to work on improving both retail concepts and product offering in key categories to adapt to different profiles of travellers. This has generated positive trends in both the stop ratio and average spend per passenger.

“Our foodservice division has passed the €1 billion mark in managed sales, doubling its revenues in just three years. This is testament to our efforts to build our leadership position in this activity.”

Group revenue rose by *4.1% on a like-for-like basis (+5% consolidated) to €7,211m, with recurring EBIT 5.6% higher year-on-year.

Click to enlarge. Source: Lagardère Travel Retail.

Group recurring EBIT declined by 1.8% to €378. Recurring EBIT for the target scope returned €361m – up from €310m in 2018 – due to solid gains at Lagardère Travel Retail and Lagardère Publishing.

Profit totalled €11m, down from €199m in 2018 as a result of the adverse impact of discontinued operations. Reinstated for non-recurring/non-operating items, adjusted profit – group share was €200m, stable year on year. Group net debt as of 31 December totalled €1,461m.

Q1 COVID-19 IMPACT

Turning to Covid-19, Rasmussen said that Lagardère Travel Retail’s three business lines and global footprint offer a resilient platform in the face of the enduring headwinds experienced by the industry.

To that end, Lagardère Travel Retail has implemented an action plan to offset the virus’s associated impacts.

“We are also confident that the long-term fundamentals underpinning future growth are still in place,” he continued. “More individuals are hungry for international mobility and this leads to a steady growth in both air and rail traffic.

“With a culture of innovation and local empowerment, a commitment to deliver operational excellence and the close partnerships we have with landlords and brands, Lagardère Travel Retail is uniquely placed to continue its growth in 2020 and beyond.”

Click to enlarge. Source: Lagardère Travel Retail.

Having had a ‘marked effect’ on business levels since the middle of January, mainly in Asia Pacific and international travel hubs serving Chinese tourists, Lagardère Travel Retail estimates that Covid-19 will effect recurring EBIT in the first quarter of around €20m (excluding the effect of the group’s action plan).

Half of this is expected to be offset during the year by accelerating ‘various initiatives’ across geographies such as longer opening hours and optimising rental costs, said Lagardère Travel Retail.

“Obviously, it is not currently possible to foresee how the epidemic will develop going forward,” a statement read. “The Group is continuing to monitor the situation very carefully, with a view to implementing any additional measures across all of its geographies as and when appropriate.”

First quarter 2020 revenue results will be announced on 30 April at 08:00am.

*Like-for-like and consolidated results differential based on a €92m positive foreign exchange effect due to the appreciation of the US dollar.