Duty-Free Sales: Dufry Versus Lagardere Travel Retail

Retail Duty-Free Sales: Dufry Versus Lagardere Travel Retail Kevin Rozario Contributor Opinions expressed by Forbes Contributors are their own. I cover retail and the global traveling shopper. New! Follow this author to stay notified about their latest stories.

Got it! Aug 10, 2022, 01:35am EDT | Share to Facebook Share to Twitter Share to Linkedin Duty-free retailers are regaining momentum. getty This year’s travel rebound—which has caused misery for many airport passengers, due to a lack of staff and canceled flights —has proved to be a shot in the arm for duty-free retailers Dufry and Lagardère Travel Retail. After the ravages of the pandemic, the global duty-free business is now on a path to recovery, but numbers revealed by these two leaders in the travel retail space indicate that some regions are doing a lot better than others.

As travel gradually picked up in the first quarter and accelerated thereafter, France’s Lagardère Travel Retail saw its half-year sales to June double to €1. 69 billion ($1. 73 billion) driven by surges in France and EMEA (excluding France) of 120% and 148% respectively.

The uplift came on the back of a strong recovery in intra-European and transatlantic travel. There was slower growth in the Americas where Lagardère Travel Retail reported sales up by 79%, while in the U. S.

they rose by just 64%. However, this must be taken in context of the company’s U. S.

business, Paradies Lagardère, having performed well last year given the boost in American domestic trips that had already begun then, making for a harder comparison. In a social media post, CEO Dag Rasmussen described the H1 performance as “exceptional” and said: “This is largely due to the dynamic recovery of air travel and to outstanding efforts to optimize sales potential and create efficiency gains. ” MORE FOR YOU ‘No Christmas Trees, No Christmas Trees’ Another Shortage May Be On The Way The Grocery Business Is Going To Get Much More Competitive Costco Addresses Supply Chain Pains By Chartering Their Own Ships Dufry hits $3 billion Switzerland-based Dufry, went one better with a sales hike of 147% to reach Swiss francs 2.

92 billion (just over $3 billion) in the first half sending the share price up by 4% on Tuesday. Dufry has seen strong recovery at European airports including London, Heathrow Airport. (Photo by: .

. . [+] Prisma by Dukas/Universal Images Group via Getty Images) Universal Images Group via Getty Images EMEA—the retailer’s biggest region, accounting for roughly half of global sales in H1—powered ahead with revenue tripling to $1.

53 billion. The best performers were Mediterranean countries including Turkey, Greece, and the Middle East as leisure demand took off. In addition, the U.

K. , France, Spain, Eastern Europe, and Africa all made progress. Xavier Rossinyol Dufry Group’s new CEO , commented: “Regions like North America, Central America and the Caribbean, as well as some southern European and Mediterranean countries, are performing in line with, or above, 2019.

We are closely monitoring consumer sentiment and the propensity for travel-related spending over the next months. ” Dufry is seeing its positive momentum continue into the third quarter, with July sales estimated at 90% of 2019 (at constant exchange rates). This has crept up from June’s 85.

5%. At the end of July, 2,091 shops were open again, globally, representing more than 90% of sales capacity. However, in the half-year to June, Dufry’s sales still fell short of H1 2019 by about 25% while Lagardère was off by only 15% and could reach pre-pandemic revenues by the year-end.

Another indicator of normalization is that Dufry’s duty-free to duty-paid ratio has shifted. Duty-free sales have swung back to accounted for 58% of turnover with duty-paid making up 42%. This time last year, the strong revival of the U.

S. domestic travel market, led by Dufry’s Hudson business, meant that duty-paid sales had become the primary sales segment for a while with a 54% share. Awaiting a revival in Asia Where both company’s continue to suffer is in Asia-Pacific, though revenues there are not particularly significant.

For Dufry, growth hit an anemic 5%, with sales reaching only 16% of 2019, mainly thanks to restrictive Covid approaches that affected many markets. For Lagardère, Asia-Pacific revenue climbed even less at 1. 6%, thanks mostly to the Pacific zone opening up, while China’s zero-Covid policy and recent lockdowns severely hampered a recovery of domestic and international Chinese air passenger traffic.

Lagardère Travel Retail’s Aelia branding at Rome’s Fiumicino ‘Leonardo Da Vinci’ Airport in Italy. . .

. [+] (Getty) getty Dufry is exuding more confidence now that it is set to join forces with Autogrill , a deal that gives the Swiss company something it never had before at any scale; a food and beverage (F&B) arm. The move also takes some of the limelight away from Lagardère Travel Retail whose USP was its inclusive approach to the travel retail channel, encompassing a lot of F&B know-how.

But Rasmussen remained bullish that the model his company first established will continue to thrive. “There are interesting times ahead for our industry. Our long-standing expertise developing holistic customer journeys via three business lines (duty-free retail, convenience and F&B) is a great strategy,” he said.

“We have been pushing it for the past 10 years, and I believe changing market dynamics will open up more opportunities for us to seize, not less. ” Dufry expects to close the first stage of the Autogrill deal—the transfer of Edizione’s 50. 3% stake in Autogrill—by March next year “subject to our shareholders’ approval at the upcoming (August 31) EGM” noted Rossinyol.

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