Revenue at magazine entertainment group Lagardère’s travel retail division jumped 77%* in the first nine months of 2022, compared with a 0.8% increase in the French advertising company’s other core businesses. The rise means travel retail is once again the star of the show after huge declines during the worst of the Covid-19 pandemic.
Lagardère Travel Retail – whose brands include Aelia, Buy Paris Duty Free and Relay – generated sales of €2.8 billion in the nine-month period compared to €2 billion at Lagardère, expanding the airport retailer’s share of the company’s total revenue and providing greater certainty that business Airports have found their feet again.
The third quarter results confirmed that the previously soft market conditions have strengthened considerably. In the three months to September, when the division won a master franchise in Saudi Arabia, Lagardère Travel Retail’s sales increased by 54%. The increase was mainly due to the increase in the number of international air passengers, but was also helped by the global expansion of the division – with a particularly strong footprint in mandatory payment at airports in China where domestic travel, despite the ups and downs due to sporadic Covid outbreaks, helped luxury sales.
The performance in the third quarter returned the business of the travel retail division to almost the same level as in the third quarter of 2019 (a decrease of only 0.5%). The best growth came from the EMEA region (excluding France) at 74%, helped by an increase in regional and transatlantic travel – driven by Americans with a strong dollar in hand – and a busy summer tourist season, particularly in Italy, Belgium and the United Kingdom.
Caution as economic and geopolitical volatility remains
In France, where Lagardère Travel Retail also has train station stores, revenue grew by 63% following the recovery in air and rail traffic, with both intra-European travel increasing. The Americas had slower sales momentum of 33%, driven by domestic travel in the United States and the long-awaited recovery in Canada.
Revenue growth in the Asia Pacific region was the weakest at 6.1% as China’s zero-covid policy continued to prevent Chinese travelers from traveling internationally. In a statement, the airline said it was “well-positioned to benefit from the resumption of flights as and when public health measures are lifted,” likely a reference to markets in Asia and China, although the zero-covid policy remains in place following the five-yearly Communist Party Congress this month.
Lagardère claims that its retail travel revenue recovered faster than IATA traffic trends in the third quarter of 2022, due to its domestic operational focus and the company’s foothold in Europe and the US through its Paradies Lagardère retail business.
However, due to the volatile environment of the last quarter of 2022, which is being shaped by inflationary pressures and geopolitical instability due to Russia’s invasion of Ukraine, Lagarde continues to take steps to keep costs under control. The company’s financial exposure to both Russia and Ukraine is limited – in 2021 they accounted for less than 0.1% of consolidated revenues – but the group says it will remain vigilant, taking into account direct and indirect effects, particularly in relation to international sanctions, on the conflict. could be about her activity.