“A milestone year” – Lagardère Travel Retail full-year revenues hit €5 billion and profitability improves

Lagardère Travel Retail was the engine of group growth last year, with profit levels rising sharply (Aelia Duty Free at London Luton Airport pictured)

FRANCE. Lagardère Travel Retail today reported €5,018 million in revenue for 2023, a leap of +27.8% on a reported basis and +23.4% like-for-like. Crucially, profitability in the Lagardère Group division rose sharply, as recurring EBIT (earnings before interest and taxes) came in at an “exceptional” €245 million, almost double the 2022 figure of €136 million.

Speaking on a call with investors on Tuesday evening, Lagardère Group Chairman and Chief Executive Officer Arnaud Lagardère said the business had taken advantage of the “extraordinary growth and investment in travel retail”. Chief Financial Officer Sophie Stabile hailed “a milestone year” for Lagardère Travel Retail.

The difference between reported and like-for-like data was attributable to several factors. These included a €42 million negative currency effect, mainly resulting from the depreciation of the US dollar (€28 million negative impact) and Chinese yuan (€15 million negative impact). The other factor was a €183 million positive scope effect relating to the acquisition of Costa Coffee Poland (€36 million), Marché International (€149 million) and Tastes on the Fly (€27 million).

Group revenue climbed +16.6% as reported, and +14% like-for-like, with the travel retail arm the key contributor; click to enlarge

In France, trading for the travel retail division continued to recover, with revenue up +15.9% (like-for-like) with robust sales at regional airports. The EMEA region (excluding France) stood out for sales growth of +26.6%, driven by the increase in international tourist traffic, as well as by excellent performances in Italy and Poland, alongside network expansion.

The Americas region continued to grow, with revenue advancing +16.3% against an already high comparison basis, benefitting from a favourable local economic environment (particularly in the US), and the strong rebound in international traffic in Canada.

Revenue by region and activity in the travel retail division; click to enlarge

Asia Pacific revenue jumped +52.1% from a low 2022 comparison basis following the delayed reopening of borders in China, but the business remains challenging against the backdrop of weakness in the Chinese economy.

Commenting on performance in Asia on the investor call, Lagardère Travel Retail Chairman & CEO Dag Rasmussen said: “China is not recovering and is not in a good macroeconomic position. We have not returned to break-even in Asia.”

Asked what effect the 2024 Paris Olympic & Paralympic Games might have on the travel retail business, Rasmussen said: “We have seen in other places that the travellers who visit are new and that many traditional tourists stay away. We don’t expect a significant impact.”

The Lagardère Group posted revenue of more than €8 billion (+16.6% reported) and recurring EBIT at a record €520 million, up €82 million. Adjusted profit for the group came out at €252 million versus €265 million in 2022.

In Q4, revenue for Lagardère Travel Retail hit €1,299 million, up +18.9% as reported and +15.2% like-for-like. The difference between reported and like-for-like data is attributable to a €20 million negative currency effect, chiefly resulting from the depreciation of the US dollar (€16 million negative impact), and to a €55 million positive scope effect.

Lagardère Travel Retail revenue breakdown; click to enlarge

Lagardère Group Chairman and Chief Executive Officer Arnaud Lagardère commented: “In 2023, we achieved performance levels not seen for 15 years, thanks to the talent and commitment of the Lagardère group’s teams. Our two main locomotives are running at full speed and our growth validates the development strategy that we have patiently and meticulously built over these past few years.

“Lagardère Travel Retail took full advantage of the growth in domestic, regional and international air traffic across its various locations, particularly in the EMEA region. All of the division’s key performance indicators improved, with revenue exceeding €5 billion and recurring EBIT up by €109 million year on year.”

Commenting on prospects for the travel retail division, the group noted: “With ongoing robust momentum in global air traffic, in spite of geopolitical tensions and uncertainty concerning a rebound in Chinese international tourism, Lagardère Travel Retail has potential for revenue and profitability growth, thanks in particular to its efforts to optimise its operations”. ✈

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