Southern Europe & Africa

Changing patterns in the world’s most important tourist destination

Dufry is the market leader in the Mediterranean, which is the world’s most important touristic region. Moreover, Dufry is the main duty-free operator in important popular destinations such as Spain and Greece. We are also present in France, Italy, Turkey, Malta, as well as in Morocco and Egypt. With this portfolio, Dufry captures major travel flows in this key geographical area. 

The division, headquartered in Madrid, also manages all African operations of Dufry in Cape Verde, Egypt, Algeria, Ghana, Ivory Coast, Kenya, Morocco and Nigeria as well as our partnership in Portugal. In total, the division comprises 130 locations in 15 countries in Southern Europe and Africa. 

2018 saw some changes in tourist flows in the region. Spain, after a number of years of strong growth, experienced a relatively stable number of tourists, but a change in the mix of nationalities. 

While Spain was negatively affected by the change in travel patterns, this was partially compensated in other locations, particularly in Turkey. After a very challenging environment in 2016, Russian travelers returned to our Antalya operation in 2017, and in 2018, the business finally swung back to its full potential, with a strong increase of Western European travelers visiting Turkey. Elsewhere in the division, performance was strong in Italy, France, Malta and Kenia. 

In 2018 we continued expanding and improving our business in the region. In Malaga, Spain, we refurbished all the main stores, covering 2,900 m2 of retail space. Important renovations have also been implemented in Antalya, Turkey (3 stores – 1,700 m2), Toulouse, France (main store – 1,700 m2) and Heraklion, Greece (main store intra-EU – 1,600 m2). 

UK & Central Europe

Solid performance and important retail development

Headquartered in London, the division comprises all our operations in Central Europe, including the United Kingdom, Sweden, Finland, Switzerland and Germany. It features operations in 58 locations in 6 countries and a broad variety of customer nationalities from mature and emerging markets with both tourist and business travelers.

In 2018, the division reported an ongoing good sales performance in the United Kingdom, driven by a steady growth in the number of passengers and ongoing improvement in the spend per passenger. 

Switzerland, excluding Geneva, also posted good growth, due to a combination of the refurbishment and introduction of the New Generation Store concept in Zurich along with growth in passengers.

In the year under review, Dufry further secured its strong footprint in the United Kingdom. After renewing important operations in 2017, such as Aberdeen, Glasgow and Liverpool, in 2018 Dufry renewed its Gatwick concession until 2025.

We have also renovated several operations within the division including several important operations in the United Kingdom. Among the main developments and highlights are: London Heathrow Terminal 3, with the launch of Dufry’s sixth New Generation Store (2,500 m2); Glasgow, where we refurbished the main shop (1,400 m2); and Liverpool, also with a full renovation of the main store (900 m2). At Zurich airport, we have further enhanced our New Generation Store concept.

Among the most recent new contracts wins in this Division is a long-term contract with P&O Ferries for 15 ships connecting the UK with France, Belgium, the Netherlands and Ireland, as well as an agreement to expand Dufry’s convenience store offering at Zurich Airport by adding a new concession for 5 additional Hudson shops, spread across the terminals.

Eastern Europe, Middle East, Asia & Australia

Important new wins, contract renewals and renovations in a strategic region

Asia and the Middle East is a strategic growth area for Dufry, as travel retail in the region is still fragmented and the area features the highest current and prospective passenger growth globally. With its presence in 32 locations in 17 countries Dufry is already today the most international travel retailer in that region and features the highest number of operations.

Headquartered in Hong Kong, the division includes several locations in Armenia, Bulgaria, Kazakhstan, Serbia and Russia in Eastern Europe, as well as in the United Arab Emirates, Jordan and Kuwait in the Middle East, in Australia, Hong Kong, Macao, Singapore, Malaysia, Indonesia, Cambodia, India and Sri Lanka, and also in China and South Korea in the Asia Pacific region. Building on this well diversified portfolio, it is our goal to further expand our presence in Asia.

The performance of the division continues to be very strong. Driven by a strong increase in Chinese travelers in the region, several operations even recorded double digit growth in 2018, such as South Korea, Cambodia, Indonesia, Australia, Jordan and Kuwait.

In 2018, we saw several important developments in the division. In September, we opened our duty-free shops at the new West Kowloon train station in Hong Kong, from where the MTR, a high-speed train, connects with Mainland China (Shenzhen). Furthermore, we opened our downtown operation in Genting Highlands, a tourist resort featuring casinos, shopping malls, and outdoor leisure activities located northeast of Kuala Lumpur. Last but not least, we strengthened our position in Australia with the opening of a duty-free shop at Perth Airport.

Latin America

2018 – A challenging year in Latin America

Division Latin America comprises all Dufry operations in Central and South America as well as in the Caribbean. Dufry has had a very strong market position in Latin America for years and the region includes some of the most dynamic travel retail markets in the world.

The region continues to offer expansion opportunities, not only in airport retail but also in other channels such as border shops, cruise ships and downtown operations.

Headquartered in Miami, USA, the division runs operations in Argentina, Brazil, Bolivia, Colombia, many locations in the Caribbean, Chile, Dominican Republic, Ecuador, Honduras, Jamaica, Mexico, Nicaragua, Peru, Puerto Rico and Uruguay.

Within the division, we experienced two completely different market situations in 2018: Central America, including the Caribbean, had a solid performance that was further supported by the substantial expansion of our cruise business by 12 new ships, In South American markets, the overall economic situation was challenging, mainly driven by the strong currency devaluations in several countries, such as Argentina and Brazil, which led to the lower purchasing power of local consumers in US Dollar terms.

Business development in the region included our Cancun operation in Mexico, where similar to the full renovation last year in Terminal 4, we fully refurbished the main shop in Cancun T3 and implemented the second new generation store at the airport, covering 1,800 m2 of retail space.

North America

Year of strong growth and expansion in North America

The North American travel retail market is another of Dufry’s traditional core markets. Since the acquisition of Hudson in 2008, the division has successfully expanded the original duty-paid convenience business and has grown its portfolio of concepts and retail formats.

In 2018, we set another milestone in the successful history of Hudson, with its Initial Public Offering on the New York Stock Exchange and trading of the HUD shares since February 1, 2018. The separate listing of our North American business allows us to develop this market with a somewhat different focus compared to the rest of Dufry. Due to the importance of food & beverage (F&B) in North America, and the convergence of retail with F&B in parts of the business, the strategic development in North America should include a strong F&B angle. Moreover, airports are increasingly looking for so-called “master concessionaires” to operate both travel retail and F&B operations and to act as unique partners for the management of the airport’s commercial area. In this North American specific market context, the IPO gives strategic flexibility to Hudson, while maintaining the benefits of being part of Dufry Group. Dufry retains a 57% ownership in Hudson and we consider the position in North America as strategic.

“Hudson” is the most recognized travel retail convenience shop brand in the world. In addition to almost 550 convenience shops in North America, the ongoing modernization of the airport infrastructure in the United States offers considerable potential to further expand with duty-free operations, as well with brand boutiques and specialized shops. Hudson already successfully operates all of these formats in North America, across over 88 locations in both the US and Canada.

The division performed very well in 2018, driven by a combination of passenger growth and new openings along the year.

In terms of retail development, highlights were the 800 m2 of space added to our existing duty-free business in Las Vegas, the opening of seven new duty-paid stores at Fort Lauderdale airport (800 m2) and the opening of 7 travel essential, specialty retail and duty-free shops at Raleigh-Durham airport (600 m2).

Important contracts were also signed in 2018: at Boston Logan airport we concluded a contract extension for 10 years, which in addition provides a 36 % expansion over the current footprint. We also won a new contract in Philadelphia to operate 11 stores covering 900 m2 of retail space.

To have an in-depth view of the performance of our North American division please follow this link that will take you to the Hudson Group Investor Relations website and the Annual Report 2018.

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