Lagardère Travel Retail maintains momentum with organic growth in 2015

FRANCE/INTERNATIONAL. Lagardère Travel Retail sales (excluding the Distribution division) climbed by +8.2% year-on-year on a like-for-like basis in 2015, parent company Lagardère Group reported today.

The growth was driven by passenger traffic increases, consolidation of acquisitions and an expanded portfolio of contracts plus new and modernised stores. All regions posted positive like-for-like trends: France (+5.8%), Europe outside France (+9.9%), North America (+5.5%), and Asia-Pacific (+10.4%).

Including the Distribution division (which is being disposed of country by country), the travel retail division had sales of €3,510 million, down by -8.0% on a reported basis and up +4.3% like-for-like. The currency effect for the division was positive (+€57 million), due to the appreciation of the US Dollar, the Swiss Franc and the Pound Sterling.

As expected, the scope effect was negative by -€498 million, broken down as follows:
• Miscellaneous effects of sales deconsolidation, amounting to -€644 million, with, essentially:
– the deconsolidation of Relay activities in train stations in France (now consolidated using the equity method through the creation of a joint venture with SNCF in September 2014) for -€222 million, as well as high-street retail activities in Poland (now consolidated using the equity method after disposal of 51% of Inmedio in December 2014) for -€103 million;
– the disposal in Switzerland of Press Distribution activities in February 2015, with an impact of -€266 million, and of Payot book stores in July 2014 with an impact of -€28 million.
• €146 million in acquisitions, primarily Paradies in the USA in November 2015, and Airest in Italy in April 2014.

The strategic transformation of the division continues. Travel retail now represents 73% of total consolidated sales, compared to 66% in 2014.

The group noted in a statement: “The market environment in 2015 was marked by the brisk pace of growth in air traffic, the continued downturn in the press market and an unsettled geopolitical and macroeconomic situation. The development strategy of Lagardère Travel Retail was a success, with accelerated organic growth in travel retail and the completion of acquisitions in a growing North American market (primarily Paradies). However, the end of the year was marked by the negative effect of the attacks in Paris.”

New concepts such as Amuse Beauty Studio in Sydney (above) and the next generation Aelia Duty Free store lifted the Lagardère Travel Retail business in 2015

In Q4, sales for the division totalled €937 million, up +1.2% on a reported basis and up +3.3% like-for-like, with the difference essentially due to a negative scope effect (-€22 million) due to the deconsolidation of Distribution activities in Switzerland, offset by the consolidation of Paradies’ operations. The currency effect was slightly positive (+€7 million).

(Figures below are presented on a like-for-like basis.)

Travel retail (excluding Distribution) grew by +7.9% year-on-year. The growth gap compared to the strong third quarter (+9.9%) was due to the impact of the attacks in Paris in November (resulting from lower passenger traffic).

In France, activity contracted by -0.4%. The slowdown in passenger traffic in French airports after the Paris attacks in November primarily affected the duty free segment.

Europe (excluding France) posted good growth (+12.5%), driven by Italy (+8.4%), which delivered a “good performance” in Rome and Venice, Iceland (shops opened in Reykjavik), Luxembourg (opened on 1 November) and the Netherlands (network extension). In Central Europe, sales also rose significantly, specifically in Poland and Romania (network development).

Sales were up in North America (+4.5%) thanks to network expansion in airports, especially in Los Angeles and Dallas.

In Asia Pacific, growth (+17%) was sharp, particularly in New Zealand (with opening of duty free outlets at Auckland Airport in July). China posted “satisfactory activity” due to the sustained development of fashion operations (Kunming and Xi’an), said the company.

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