Lagardère Travel Retail has posted revenue of €852 million in the first quarter of 2016, representing a +7.3% year-on-year increase on a consolidated basis. On a like-for-like basis the increase was +6.2%.
The company reported a negative exchange rate effect in the first quarter of -€8 million, primarily linked to the depreciation of the Australian and Canadian dollars and a positive scope effect of +€23 million.
This scope effect included the disposal of Distribution activities in Switzerland (Naville) in February 2015, in the United States (Curtis) in June 2015, and in Spain (SGEL) in February 2016, with an impact of -€100 million. Also significant were acquisitions totalling +€123 million, mainly linked to the consolidation of Paradies’ US operations beginning in November 2015 and fashion and confectionery stores at New York JFK Airport beginning in April 2015.
Continued growth momentum in travel retail was noted, and Lagardère Travel Retail said its strategic transformation was “picking up speed”. Travel retail now represents 81% of revenue for the division, compared to 66% in the first quarter of 2015. Taking this into account, the Travel Retail business was up +8.9% on a like-for-like basis.
Growth is being driven by an increase in traffic, an improved product mix, the development of Duty Free and Foodservice, modernised sales outlets, and the roll-out of new concepts, Lagardère said. The company pointed out that the positive result was achieved despite the impact of the terrorist attacks in Paris and Brussels on European tourism, the appreciation of the Euro, the decline in spending by Chinese travellers and the slowdown in US growth.
Regional breakdown
An increase of +1.7% in France marked a return for growth in the country and was attributed to an expansion of the company’s network. It was achieved despite an “unfavourable business climate” as a result of the Paris terror attacks.
In Europe (excluding France), strong growth of +13.0% was recorded. This was driven by the continued ramping-up of Italian operations (+8.0%, of which +9.3% in Rome) and the start-up of operations in Iceland and Luxembourg.
A +30.3% growth surge in Poland was driven by the opening of new sales outlets. Romania also posted robust growth (+27.8%) due to network development and the rise in tobacco prices in the country. Lagardère said business recovered in the Czech Republic (+7.1%), despite the impact of a decrease in duty free spending by Russian passengers.
In North America, revenue was up relative to Lagardère Travel Retail’s historic patterns (+3.1%) and was primarily driven by traffic growth.
A substantial +17.5% increase in revenue was recorded in Asia Pacific, driven by growth in fashion sales outlets in China and the launch of duty free operations in Auckland airport as of July 2015.
Revenue in the Distribution division was down -2.2%, with the business impacted by the interruption of Hungarian export activity in 2015 due to regulatory uncertainties.
Lagardère Group consolidated revenue in the first quarter of 2016 was €1,586 million, compared to €1,572 million for the same period in 2015. This represented a +0.9% increase on a consolidated basis but a -2.0% decrease on a like-for-like basis, adjusted for a -€10 million negative foreign exchange effect and a positive scope effect of +€54 million.
