Interview of Dag Rasmussen, Chairman & CEO of Lagardère Travel Retail, in Les Echos

Dag Rasmussen, Chairman and Chief Executive Officer of Lagardère Travel Retail, speaks to the leading French newspaper about how Covid-19 crisis has shaken up the business and how it is planning to bounce back through agility and innovation.

The distribution and catering arm of the Lagardère Group had up to 98% of its more than 4,000 outlets worldwide closed at the peak of the Covid-19 pandemic. In the absence of a rapid resumption of air traffic, it is banking on new offers and wants to believe in the green light from Brussels to the opening of duty free on arrival at airports.

When one sees in a corporate name the words "travel" and "retail", one might say, considering the effects of the Covid-19 pandemic, that the second, partly spared, should compensate for the sharp drop in activity of the former. Except that for Lagardère Travel Retail, the distribution arm of the Lagardère group, the two are linked. In other words, most of its business takes place at airports and train stations.

Near-total shutdown

Needless to say that while the poor half-year results published on 30 July may have surprised some analysts who did not take the measure of the crisis, and caused the stock market price to fall by almost 10% the following day, the severe decline in sales of Lagardère Travel Retail to 947 million, down 55% year-on-year, resulting in an operating profit loss of 209 million, has a perfect explanation.

"We felt the effects of coronavirus as early as January in Wuhan, the cradle of the epidemic, where we operate 88 outlets," Lagardère Travel Retail’s CEO Dag Rasmussen said in an interview with Les Echos. "However, in the first two months of the year, our overall activity was quite good. That was before almost all of our more than 4,000 outlets worldwide closed, with the exception of a few Relay stores considered as essential stores and some shops in hospitals. »

« Coordination squad »

At the height of the pandemic in April, Lagardère Travel Retail's business was down 91% on the month, 98% in some weeks. Even before this neartotal shutdown, the group had quickly set up a "coordination squad", "which allowed us to very quickly generate 400 million euros in savings, including rent savings," says Dag Rasmussen.

The group was also able to benefit from government support where it was available, particularly for staff costs. And it stopped all external expenses (business trips, consulting missions...). "On a more structural level, we have begun to renegotiate contracts over the medium term and completely revisited the way we work to gain in agility," he adds. Lagardère Travel

Retail also took the opportunity to refine its social and environmental responsibility strategy, with its PEPS program, for "Planet," "Ethics," "People" and "Social."

Digital strategy

On a commercial level, Lagardère Travel Retail's teams have demonstrated great creativity during the lockdowns. The Chinese teams, for example, have organized "online" product sales through WeChat and TikTok to a preferred customer base. "Employees presented the products in live videos and they were sent directly to customers’ homes. This initiative has enabled

us to partly offset our revenue losses," says Dag Rasmussen. "But the essence of our digital strategy revolves around the in-store customer experience," he continues.

Now it's time to work with airports, where the group generates 80% of its 5.5 billion euros in annual sales (before Covid), on a re-opening programme based on the resumption of air traffic. In China, domestic traffic has already picked up 75%, says Lagardère Travel Retail’s boss. The group's sales in this country were up 34% compared to last year in the penultimate week of July.

Entry into Japan

In Europe, Lagardère Travel Retail wants to believe that the Commission will give the green light to open duty free shops on arrival at airports. "Duty Free on arrival is already available in China, Norway, Switzerland or Africa," Rasmussen says.

Finally, testament to the group's confidence in the future of the Travel Retail sector, Lagardère Travel Retail opened its first Pierre Hermé store in Tokyo's main train station on Monday (August 3rd), an opening that marks its entry into Japan.

Written by Antoine Boudet, from Les Echos

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