Dufry operates in an industry that has shown solid and resilient growth in the last decades – and which is expected to continue to grow. According to Generation Research, a travel retail market research specialist, the travel retail industry had a market value of USD 69.3 billion dollars in 2018, an 9.5% increase on 2016, and it is expected to reach USD 93.8 billion in 2022.

Within this prospective business environment, Dufry follows a strategy of profitable growth – see also our strategy section – in order to secure a sustainable development for the company and all its stakeholders.

Create best possible shopping experiences and environments.

As a retailer, our ambition is to create the best possible shopping environments to capture the interest of travelers and to generate selling opportunities. We closely cooperate with airport authorities and brand suppliers for store design, passenger flows and allocation of commercial space. This collaborative work results in improved passenger services as well as more visibility and opportunities for brands. Testament to this collaboration, and just as a remarkable example, is the London Heathrow Airport – where Dufry operates more than 60% of the total retail by value. In 2018 again, Dufry’s retail in Heathrow has been recognized by Skytrax, winning the accolade for Best Airport Shopping in the world for the ninth consecutive year.

Taking the shopping experience to the next level

Dufry's ambition is to remain best in class when it comes to customer service. As reflected in our corporate brand statement, WorldClass.WorldWide, at Dufry we strive to provide our customers with the best retail experience in any store we operate. For the more detailed aspects related to our customer services and approach, please refer to the Customer Section.

Engaging with customers through digital technology.

In 2018, we continued investing in renewing, refurbishing and upgrading our stores and to include additional services that improve the passengers' shopping experience. Complementing the physical construction of the stores and the adoption of corporate best practices with our digitalization strategy has resulted in the creation of “New Generation Stores”. As described in the Strategy section of this Annual Report, these stores make extensive use of digital technology to take customer engagement to the next level by facilitating the communication with the most relevant nationalities of passengers in their own language and addressing the individual preferences of the different passenger profiles. As well as generating a unique shopping experience, digitalization within the store also supports sales staff when serving customers. So far, there are New Generation Stores in the airports of Cancun, London Heathrow, Madrid, Melbourne and Zurich. Dufry has plans to extend this store concept to two more locations in 2019 (Buenos Aires and Amman). Moreover, in the attempt to further improve customer engagement, Dufry enhanced its online Reserve & Collect service, which is now available in 39 countries and 153 locations, to its loyalty program RED by Dufry covering 40 countries and 200 locations, as well as the use of sales tablets for shop floor employees, now in service in 30 countries across 60 locations.

Another important component of our store renovations is to create a strong sense of place, linking the shopping environment to the country's cultural heritage, where they are located. One of the most remarkable examples is La Tequilería in our Cancun New Generation Store. The powerful combination of state-of-the-art store designs with local motives, together with a curated selection of local products on offer that are acquired from local suppliers, results in unique shopping spaces that invite customers to a full cultural immersion in the destination.

Track record of delivering successful shopping concepts.

Industry recognition

Our ongoing strive to develop state-of-the-art shopping environments and new services is also being recognized by the industry and sets new standards. Today, Dufry has a proven track record in delivering successful shopping concepts, specialized stores and marketing activations and some of the latest awards gained by Dufry include the 2018 Moodie Davitt Report’s Dreamstore Award to both our Collection and Sunglasses stores in Heathrow’s Terminal 5, an award where the world’s brand owners rate the world’s travel retailers. A detailed list of the awards won during 2018 is available here.

Stakeholder Value Allocation by Dufry in 2018

The stakeholder value allocation corresponds to corporate output less third-party inputs. The calculation is based on Dufry’s EBIT plus personnel costs. It does not comprise of values allocated to business stakeholders, such as suppliers and landlords.

The value allocated reached CHF 1,546.6 million in 2018 (CHF 1,553.7 million in 2017). Out of this amount, CHF 1,175.2 million was accrued to our employees in form of remuneration and social security payments. CHF 196.4 million was given as interest payments to our bondholders and lending banks. Income taxes to public authorities and communities in which the group companies are located amounted to CHF 98.8 million. The remaining amount was allocated to retained earnings and local partners. In 2018, the Board of Directors revised the company’s capital allocation strategy and proposed to the Annual General Meeting 2018 the payment of a CHF 3.75 dividend per registered share for the 2017 business year. Moreover, the Board of Directors approved a share buyback program to enhance the value of shareholders’ equity. With these two initiatives, the company returned CHF 600.6 million of capital to its shareholders. Further details of the dividend and the share buyback program can be found on the Investors section.

Anti-corruption and anti-competitive behavior

Corruption is a worldwide phenomenon which is considered to be the cause of many negative economic, social and environmental impacts. From a business perspective, corruption distorts the functioning of the market and undermines governance institutions and in general the rule of law.

No-tolerance approach to corruption.

The subject of corruption is of considerable importance to Dufry as the Company expands its operations to many countries with elevated corruption levels and participates in many public procurement processes to bid for airport, seaport and other concessions around the globe each year.

Dufry prohibits bribery and corruption at all times and in any form. We believe that in order to remain a solid business leader, all business must be conducted ethically and in full accordance with all applicable laws, rules, and regulations. Dufry requires all of its employees, managers and executives to behave at all times with honesty, ethics and within the confines of applicable law and in full compliance with Dufry’s Code of Ethics, as well as its Sustainability and Integrity in Business Transactions Policy. Where laws, rules or customs exist that are different from the principles set out in this Policy, Dufry managers, executives and employees are required to follow whichever sets the higher standard in this regard.

Dufry also wants its officers, managers and employees to fully respect the safeguarding of integrity and fair dealing when performing their activities on behalf of Dufry and to promote the sustainability, diversity, decent work, human rights, anti-harassment and non-discrimination standards adopted by the Dufry Group. Dufry’s management operates a no-tolerance approach to both active and passive corruption and seeks to minimize the circumstances in which corruption could occur in its global business development activities and operations.

Dufry’s Code of Ethics, and the Sustainability and Integrity in Business Transactions Policy outline the types of conduct which are not permissible and impose strict rules in relation to charitable contributions and sponsorships as well as gifts, hospitality and entertainment expenses and facilitation payments to minimize the risk of corruption. In addition, the rules require careful due diligence to be conducted on new external partners Dufry is working with, including a procedure that must be followed to vet all new minority partners, consultants for business development projects, counterparties to M&A transactions and other similar counterparties.

Dufry also conducts training of managers and relevant employees on an ongoing basis. These training sessions reflect the changes introduced in the modified Code of Ethics, Sustainability and Integrity in Business Transaction Policy as of May 1, 2018, such as the formal establishment of a Compliance Department within the Legal and Governance Department, enhanced third-party due diligence procedures and expansion of Dufry’s anonymous reporting channels, among others.

Dufry’s Compliance Department regularly evaluates the content of Dufry’s training on Governance and Corporate Policies. The efforts of the Compliance Department are fully coordinated with, and supported by, the CEOs of each Division and the respective HR Departments who help identify the individuals, including new hires, who should receive the training.

New compliance reporting channels launched.

Dufry also undertakes to properly investigate all complaints and prohibits retaliation or discrimination against any employee who reports a concern made in good faith. As of June 1, 2018, two new Group-wide reporting channels have been initiated to go along-side the e-mail reporting channel integrity@dufry.com: (1) a world-wide, toll-free hotline in 9 languages (English, Spanish, Portuguese, French, Italian, Mandarin, Russian, Greek and German) also accessible via local dial-in numbers for all countries in which Dufry operates; and (2) the online reporting website www.dufry-compliance.com. These reporting channels ensure the integrity of such investigations by acting as a centralized contact point through which any wrongdoing or corruption concerns can be reported directly to the Compliance Department for further investigation. Unless the report is made anonymously, the identity of any employee reporting such concerns or possible violations of Dufry’s Code of Ethics, Sustainability and Integrity in Business Transactions Policy is kept strictly confidential, unless the disclosure of the identity is required by law.

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