EUROPE, MIDDLE EAST AND AFRICA

Dufry’s largest region expands country line-up

Following the reorganization announced in June 2020, aimed at aligning the company to the new business environment and to increase efficiencies, several countries were regrouped within the former divisions*. The largest Dufry region, which continues to be headquartered in Madrid, saw its scope increasing further, now reaching 31 countries with the transfer of the Eastern European and Middle Eastern locations, as well as India and Sri Lanka operations.

In 2020, turnover in the region reached CHF 1,144.5 million as compared to CHF 4,434.2 million in the previous year, equal to an organic growth performance of –73.2%. The region was impacted by the COVID-19 pandemic since the beginning of the spread from mid- February onwards. Performance improved only as of July and August across most locations in Europe, and especially in Southern Europe at the beginning of August with the peak of the summer holidays and supported by the lifting of travel restrictions. From end of August onwards, some countries like Spain, France, Italy and the UK saw increasing COVID-19 cases and renewed travel limitations put in place more broadly across Europe starting end of September. Parts of the Mediterranean area as well as Eastern Europe, Russia and the Middle East remained less impacted by renewed travel restrictions and performed above average for the region.

The major business development events in the region were the new twelve-year concession won at Istanbul’s Sabiah Gökçen airport in Turkey which started operation in November 2020 covering a retail space of 3,900m2, as well as the successful seven-year extension of the Pulkovo airport contract in St. Petersburg, Russia. Both the new concession in Turkey and the extension in Russia further consolidate Dufry’s position in these two important tourist destinations.

In the region, Dufry opened gross new retail space of 6,296m2 such as in Helsinki (FIN), Odessa (UKR) and Zurich (CH), where the new ANECDOTE conceptual store at The Circle at Zurich airport was inaugurated in November.

With respect to refurbishments, the region saw important shop renovations in Greece at the Athens, Corfu, Mykonos and Thessaloniki airports, as well as at our operations in London (UK), Belgrade (SRB) and Antalya (TUR). The total refurbished retail space in the region amounted to 7,241m2.

 

*Note: 2019 division-related historical data allowing comparison of the performance of the former and current organizational setups is available here.

 

ASIA PACIFIC

Focusing on the important strategic growth region

Asia Pacific remains Dufry’s most important strategic growth region. With the company reorganization, the Middle Eastern countries, formerly included in this division, were re-allocated to the Europe, Middle East and Africa region*. Asia Pacific continues to account for the highest prospective passenger growth globally, while also offering considerable cooperation and M&A opportunities, created by the high industry fragmentation that continues in local markets. Dufry is already one of the most international travel retailers in this interesting region and features a large number of operations in individual countries. Headquartered in Hong Kong, the region manages 15 locations in 7 countries, with a total sales area of 22,874m2.

Turnover in the region reached CHF 160.0 million in 2020 as compared to CHF 691.6 million in the previous year, equal to an organic growth of –75.4% as Dufry’s footprint is geared towards international travel, which has been highly impacted by travel restrictions in 2020. The majority of shops in Dufry’s Asia Pacific locations were closed during most of the year, including Australia, Cambodia, Indonesia, Singapore and South Korea. On the positive side, China recovered more strongly driven by a significantly increasing demand in domestic travel since the second quarter, thus benefitting Dufry and its portfolio of duty-paid operations.

Among its business development initiatives, the region signed important joint-ventures, which open new opportunities for the travel retail channel as well as the acceleration of Dufry’s digital transformation. The highlight is the joint-venture with Alibaba to further develop travel retail in China, as well as to accelerate business digitalization with online services across the Dufry Group. In this context, the collaboration with Hainan Development Holdings for the opening of the Global Duty Free Plaza shop at the Mova Mall in Haikou is an important first step. The new downtown dutyfree shop will span over 38,920m2 across two buildings of the Mova Mall, Aquarius and Capricorn, will be completed in 3 phases and the first phase was opened right on time for the Chinese Spring Festival in 2021.

In 2020, Dufry inaugurated new shops in Perth (AUS) as well as the new confectionery concession at Singapore’s Changi airport – won in late 2019 – to operate four new shops in the Terminal 2 departure hall with a total sales area of 563m2. The refurbishment of the Macau operation completed the business development scope of the region.

 

*Note: 2019 division-related historical data allowing comparison of the performance of the former and current organizational setups is available here.

 

CENTRAL AND SOUTH AMERICA

Impacted by the pandemic only as of the second quarter

Central and South America did not see any changes within its scope of activities following the company reorganization, as the number of countries remained the same. This region comprises all operations in Central and South America including the Caribbean, and while Dufry has had for years a very strong market position in some of the most dynamic travel retail markets in the world, it continues to offer expansion opportunities across various channels. The region is headquartered in Miami (USA) and runs operations in 106 locations across 24 countries covering a retail space of 130,527m2.

In 2020, turnover came in at CHF 497.3 million as compared to CHF 1,536.1 million one year earlier, with organic growth reaching –65.8%. Overall, the region was impacted with a slight delay, as the spread of the COVID-19 pandemic reached this part of the world only in the second quarter. Central America, including Mexico, Dominican Republic and the Caribbean Islands performed more robustly supported by intra-regional travel from the USA and South America, especially during the summer months, as well as continued demand due to more flexible travel conditions. The exception was the cruise line business, which remained heavily impacted in the region. South America saw demand pick up amid border shop openings and the increase of domestic travel with duty-paid businesses performing better than duty-free operations.

From a business development perspective, new retail space was added at the Florianópolis airport (BRA) by opening a new 280m2 shop, while the Guayaquil airport (ECU) operation saw a full refurbishment of its retail space covering 1,100m2.

 

NORTH AMERICA

Full re-integration of the subsidiary

While the North American business has not seen any changes from its geographic scope, the major change implemented in the context of the company reorganization was the full reintegration of Hudson into the Dufry Group, following the delisting of Hudson Ltd from the New York Stock Exchange, completed in the fourth quarter 2020. Strategically, Dufry will continue to focus on duty-paid and duty-free travel retail as well as airport food & beverage opportunities, as this traditional core market of the company still offers substantial additional avenues of growth. Moreover, the full reintegration of Hudson is an important element in Dufry’s goal to considerably reduce the company’s complexity through process simplification, and ultimately generate sustainable efficiencies.

Turnover in North America amounted to CHF 644.4 million as compared to the previous year’s CHF 1,935.8 million, resulting in an organic growth of –65.3%. Through the year, the region, especially the US, performed above Group average due to the higher exposure to domestic travel and steadily increasing passenger numbers following the first wave of the pandemic in Spring, as well as the supportive intra-regional travel from the US to Central America. Overall performance was driven by Hudson convenience stores, food & beverage and other duty-paid offerings. Canada, characterized by its duty-free business, remained negatively impacted due to a higher exposure to international flights and ongoing restrictive measures. Headquartered in East Rutherford, New Jersey, the region manages 1,014 shops across 101 locations in the United States and Canada with a total sales area of 100,269m2.

In 2020, the North America region saw its footprint further expanding with shop openings in Indianapolis, Boston, Phoenix and Calgary among others, adding some 1,061m2 of retail space across 11 shops. Moreover, the region also further invested in its sales locations by refurbishing 31 shops in important concessions such as Los Angeles, New York and Nashville covering a retail space of 3,478m2.

 

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