Divisions and Locations
4 Divisions – 420+ Locations - The Industry's Leading Company
Europe and Africa
Dufry’s largest division accelerates growth
In early 2019, Dufry announced a new organizational structure, which among other changes combined the former divisions UK & Central Europe with Southern Europe and Africa, creating the new division Europe and Africa. This division accounted for 44 % of turnover in 2019, representing the largest segment of our Group. It features an interesting mix of tourist destinations, such as the Mediterranean area, an array of more business-oriented operations as well as several African locations, which together allow Dufry to capture important passenger flows.
The division, headquartered in Madrid, comprises and manages 204 locations in 21 countries, as well as our partnership in Portugal, covering a total sales area of 181,124 m2.
In 2019, Europe & Africa saw an important pick-up in Spain and ongoing healthy performances in the UK, in Greece, Turkey, Italy, Malta and Finland, as well as in most African operations, with highlights in Morocco, Kenia and Egypt. Overall, the new division accelerated sales performance and reported a positive organic growth of 5.8 %.
The key event in the division was the early renewal of the AENA contract in Spain covering all Spanish airports, which has been extended for up to 5 years starting November 1, 2020. The extension is an important step to secure a resilient growth pattern in this important market. Spain has already considerably improved its performance in the year under review, and Dufry is now able and looking forward to implement the best practices successfully tested in 5 airports across all Spanish hubs in 2019.
Besides this milestone renewal, Dufry continued expanding and refurbishing its business also in other airports in the division. Among the expansions worth mentioning, Dufry added 4 new stores across 430 m2 in Casablanca, Morocco, as well as 3 new shops in Italy across 410 m2 of retail space. A new contract has also been signed in Madagascar, including 3 shops for a total sales space of 640 m2 across 2 airports, which are expected to be opened in early 2020.
With respect to refurbishments, the division saw important shop renovations such as 15 shops in Spain (11,600 m2); 9 stores in Sweden (4,200 m2); 5 shops in Antalya (1,700 m2), Turkey, as well as 1 store in Casablanca (1,100 m2), Morocco.
Asia Pacific and Middle East
Strong organic growth, important bolt-on acquisition and new wins
Asia and the Middle East is a strategic growth area for Dufry. The region accounts for the globally highest current and prospective passenger growth, while also bearing considerable M&A opportunities, created by the still high fragmentation in these markets. Dufry is already today the most international travel retailer in this interesting region and features the largest number of single operations, which generated 14 % of the Group’s turnover in 2019.
Headquartered in Hong Kong, the division manages 33 locations across 17 countries, covering a total sales area of 55,139 m2. In line with our strategy to further expand our presence in this growth region, Dufry made an important bolt-on acquisition in 2019, by taking a 60 % majority stake in the Vnukovo RegStaer operation. It features more than 30 duty-free and duty-paid shops across a retail space of over 6,800 m2 with an assortment offering core duty-free categories as well as a selection of fashion and accessory products. The Vnukovo operation generated a sales volume of EUR 58.8 million in the FY 2018 and has been fully consolidated as of November 2019. With the new presence at Vnukovo airport – featuring an interesting passenger profile – Dufry considerably consolidates its footprint in the Moscow area as well as in Russia overall.
Moreover, Dufry also succeeded in winning an important new confectionery concession at Singapore’s Changi airport to operate 4 new shops in the Terminal 2 departure hall for a total sales area of 563 m2. The shops are expected to be opened sequentially as of March 2020.
Performance of the division continued to be very strong in 2019, reporting a double digit organic growth of 10.8 % driven by both like-for-like improvements in Russia and Serbia and the important contribution of the new operations in Perth, Australia, and the departure and arrival shops at the MTR high speed train station in Hong Kong.
With respect to expansions, Dufry has opened 52 new shops in Russia covering 9,150 m2 and one additional shop in Kuwait with a retail space of 1,050 m2 in 2019. Moreover, the division also saw some important refurbishments with three stores of 2,800 m2 in Jordan, and another one with 1,900 m2 in Macau.
Important increase of footprint in North America
The North American travel retail market is another of Dufry’s traditional core markets, which continues to offer substantial growth opportunities in duty-paid and duty-free, but also in the airport food and beverage channel, which our subsidiary Hudson succeeded in considerably expanding in 2019. Due to the importance of food & beverage (F & B) at airports in North America and its convergence with retail, this is a remarkable step forward in creating additional avenues of growth.
The division with its operational headquarters in East Rutherford, New Jersey, manages 1,013 shops across 86 airports in the United States and Canada with a total sales area of 100,647 m2, thus contributing 22 % to the Group’s turnover in 2019. Dufry’s North American business (Hudson Ltd.) is listed at the New York Stock Exchange since 2018 and Dufry retains a majority stake of 57 %.
In 2019, Hudson successfully executed two important transactions, allowing to considerably increase its footprint. The acquisition of the 34 Brookstone shops in airports across the U.S. includes the exclusive right to further expand the brand in the airport channel and to offer a select Brookstone assortment within the Hudson convenience shop network, thus further enhancing the product offer for domestic travelers.
With the acquisition of OHM Concession Group LLC, Hudson has not only added 60 units to its existing 50 F & B concessions, but substantially increased its own skills and expertise in airport food & beverage. This will ultimately also improve the company’s competitiveness to act as master concessionaire going forward. The OHM acquisition is an important strategic step for the future development and further expansion of the airport F & B and travel retail markets in North America.
From an operational perspective, organic growth, at 1.8 %, saw a slight slow-down in 2019 caused by the lower spend of Chinese customers in duty-free as well as some temporary impacts driven by hurricane Dorian and the grounding of the Boeing 737 MAX aircrafts.
Besides the increases in footprint mentioned above, the division added another 5,900 m2 of shop floor to its portfolio by opening 75 new shops across several locations. Hudson also succeeded to win new contracts such as the concession for 9 shops at the Indianapolis International Airport with a sales area of nearly 9,000 square feet (836 m2) and the contract for 6 shops at the Newark Liberty International Airport with 7,500 square feet (697 m2) of retail space.
To have an in-depth view of the performance of our North American division please Hudson Group Investor Relations website and its Annual Report 2019.
Central and South America
Encouraging developments in a challenging region
Division Central and South America comprises all operations in Central and South America as well as in the Caribbean, where Dufry has had for years a very strong market position in some of the most dynamic travel retail markets in the world.
Headquartered in Miami, USA, the division runs operations in 104 locations across 25 countries covering a retail space of 133,080 m2 and accounted for 17 % of the Group’s turnover in 2019. Dufry sees further expansion opportunities in duty-free and duty-paid operations within airports and alternative channels in the whole division.
Our Central American operations as well as the Cruise business continued to show good performance; particularly in Mexico, the Dominican Republic and the Caribbean. In South America, performance significantly improved in the second half of 2019, even posting positive growth in the last months of the year. In total, organic growth for the FY 2019 remained in negative territory reaching – 6.3 %.
In 2019, we saw two important and encouraging developments in South America, which provide a good potential for further growth in the coming years. First, after the Brazilian Federal Government’s approval, Dufry opened its first border duty-free shop in the country, in the city of Uruguaiana, offering a core category duty-free assortment covering 850 m2 of retail space. This new channel is an opportunity to further expand the duty-free business in Brazil. Second, the Brazilian government has also increased the allowance for duty-free purchasing on arrival from currently USD 500 to USD 1,000 as of January 1, 2020. Besides doubling the potential maximum ticket, the decision is important as it allows to considerably improve the offering by expanding the assortment with products in the price range of USD 500 – 1,000, which was not possible so far due to the earlier lower limit.
Looking at business development and refurbishments, the division saw an important contract win at the Mexico City International Airport covering 1,400 m2 of additional sales space as well as a new concession for two duty-free and one duty-paid shop totaling 650 m2 at the Florianópolis Airport in Brazil. Moreover, the division increased its sales area by opening among others 10 new stores in Brazil (1,600 m2); 6 stores in the Bahamas (1,100 m2) and 40 additional shops with 5,200 m2 on 19 new ships. The division’s refurbishment highlight was the transformation of the Buenos Aires duty-free shop of 3,100 m2 into a New Generation Store providing customers with the ultimate shopping experience.
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