Analysts are buzzing about Lagardère's record-breaking 2023, fueled by the astonishing resurgence of its Travel Retail division. But hidden within the financial reports lies a fascinating subplot: a quiet, almost overlooked, strength in Lagardère Publishing that could redefine the company's future – and upset a few assumptions along the way.

The prevailing narrative is straightforward: Travel Retail is Lagardère's growth engine, poised to eclipse Publishing in profitability within the next three years. It's a compelling story, given Travel Retail's 23.4% organic revenue growth in 2023, dwarfing Publishing's 1.9%. The travel bug is back, airports are bustling, and Lagardère's savvy acquisitions like Marché International and Tastes on the Fly are paying off handsomely.

Yet, something remarkable is happening on the Publishing side. Lagardère Publishing, despite a "soft market" and escalating costs, held its ground. Revenue remained flat, a testament to the division's ability to deftly navigate the headwinds. Even more intriguing is the resilience of Publishing's operating margin, maintaining a historically high 10.7%, a remarkable achievement given the absence of a blockbuster Asterix release in 2023.

This sustained profitability hints at a crucial dynamic: Lagardère Publishing is becoming a lean, mean, profit-generating machine. While the top-line might not be exploding, the division is laser-focused on efficiency and operational excellence. Price increases, while more selective in 2024, are still on the table, indicating a data-driven approach to maximize returns. The decision to halt the ambitious (and expensive) Polaris distribution project underscores this commitment to lean operations. Instead of a massive overhaul, Lagardère Publishing is opting for a more measured, strategic recalibration of its distribution network.

Here's where the hypothesis gets interesting. What if Lagardère Publishing, under Arnaud Lagardère's direct leadership, is quietly preparing for a period of sustained, profitable growth? Imagine this:

Doubling Down on Digital: Lagardère already saw an acceleration in e-books and audiobooks during the pandemic. This trend could be amplified through targeted investments and strategic partnerships.

A More Curated Approach: Lagardère might be publishing too many books. A more selective approach, focusing on high-potential titles and leveraging data analytics for better forecasting, could optimize resource allocation and boost profitability.

Unlocking New Markets: The French educational reforms in 2025-2026 present a significant opportunity. Lagardère's strong presence in the Educational segment positions it to capitalize on this multi-million euro potential.

Let's crunch some numbers. If Lagardère Publishing can achieve even a modest 2% annual organic growth in revenue over the next three years, coupled with a sustained 10.7% operating margin, the division's recurring EBIT would reach approximately €323 million in 2026. This is a significant jump from the €301 million achieved in 2023.

Meanwhile, Travel Retail, assuming a (still impressive) 15% annual growth in recurring EBIT, would reach about €375 million by 2026. The gap, while still favoring Travel Retail, is significantly narrower than what a cursory glance at 2023's growth rates might suggest.

Projected Recurring EBIT: Publishing vs. Travel Retail

Lagardère's quiet revolution in Publishing might be flying under the radar, but its potential is undeniable. This isn't a zero-sum game; both divisions can thrive. But the underestimation of Publishing's underlying strength might be a mistake. The coming years could reveal a fascinating competition between Lagardère's two powerhouses, with bookworms potentially giving globetrotters a run for their money.

"Fun Fact: Lagardère Publishing owns the rights to the beloved Where's Waldo? series, a testament to the division's global reach and enduring appeal. Could Waldo, with his uncanny ability to blend in, be a metaphor for Publishing's hidden strength within Lagardère's empire? Only time will tell."