With its performance driven by the U.S. and Central America & Caribbean due to successful vaccination campaigns and more flexible travel protocols, travel retail giant Dufry reported gradual improvements for the first half of 2021, as Dufry CEO Julian Diaz reiterated that the company was “positive on the opportunities lying ahead” of it as it re-opens its operations globally.
The company also reported an upwards trend in the Mediterranean, Eastern Europe and Middle East, even as Asia and South America are still impacted by restrictive measures or the health situation.
As of June, Dufry reports that around 1,600 stores were open, representing over 75% of sales capacity, and expects to open up to 70% of shops and close to 85% of sales capacity by the end of August.
The company also saw continued improvements upon easing of restrictions and encouraging demand for travel retail in open locations with July net sales performance of -50.4% compared to 2019.
Summarizing its financial growth in the first six months of 2021, Dufry reports that turnover reached CHF 1,187.2 million compared to CHF 1,586.9 million in the same period in 2020 and versus CHF 4,180.1 million in the same period in 2019.
Organic growth for the first half of 2021 stood at -22.8% versus HY 2020, and 69.5% versus HY 2019.
Like-for-like performance came in at -28.1% versus 2020 because the pandemic started to impact Dufry’s business globally from Q2 2020 on.
Net new concessions represen-ted +5.3% in a temporarily muted environment for opening up new or extending contracts for existing operations.
The translational FX effect in the period was -2.4% mainly as a result of the USD devaluation, the currency in which most of the turnover was generated in HY 2021.
Dufry reports that it added 5,387 sq. meters of retail space during HY 2021, which it characterized as “in a highly disciplined manner.”
In the Americas, these additions include 700 sqm of space at the Porto Alegre Megastore duty-paid (Brazil) shops, and a number of innovative duty paid concepts in the U.S. Dufry rolled out its Hudson Nonstop concept, sup-ported by Amazon’s Just Walk Out technology at Dallas Love Field Airport in Texas and Chicago Midway International Airport.
Hudson also opened new stores at Salt Lake City International Airport, a new Automated Retail location at Chicago Midway International Airport, and new stores at the Virgin Hotel Las Vegas.
Other business highlights include Dufry’s first Duty Free store in Odessa, Ukraine, as well as additional stores in Turkey, Greece and Russia.
Dufry says that its cooperation with Hainan Development Holdings (HDH) for the Global Duty Free Plaza at the Mova Mall in the city center of Haiku in Hainan, China, will proceed with the second opening of an additional 30,000 sq meters of space by the end of Q3 2021. This collaboration also adds to Dufry’s strategic partnership with Alibaba Group to operate offline and online travel retail in China.
Slow start to year
Dufry Group CEO Julian Diaz acknowledged that the first half of 2021 was characterized by a slow start due to ongoing restric-tions.
With the progress on vaccination in many parts of the world and the implementation of supportive travel protocols, he said that “Dufry sees clear signs of recovery in the respective regions. We are certainly not where we want to be yet, but the high demand for travel retail and the unique shopping experience offered by our operations give us confidence for the months to come.”
Net sales for July were already back at a level of -50.4% compared to 2019, he said. Also positive, the U.S. reported -23.9%, Central America and Caribbean excluding the cruise business was at -17.6% and the Mediterranean region, Eastern Europe and Middle East were -32.3% compared to 2019.
Dufry also refinanced, executing CHF 1,600 million in relevant maturities, now first coming due in 2024, and including extension of covenant waiver for another twelve months. The company also reports a strong liquidity position of CHF 2,172 million as of mid-2021, providing sufficient liquidity for driving re-openings and growth acceleration.
New concession wins
Diaz also discussed the opportunities from new concession wins and contract extensions, citing Brazil, Martinique, French Guiana, Jamaica, Dominican Republic, the UK and several locations in the
U.S, including the Hudson Nonstop stores featuring Amazon’s Just Walkout Technology.
“This initiative is part of a broader roadmap for further store digitalization, which also includes projects for digital engagement throughout the full customer journey. Our collaboration in Hainan, China, already features such a combination of physical store excellence and digital engagement and we are well progressing in the opening up of additional 30,000 sq. meters of retail space in the second half of the year,” said Diaz.
“We are positive on the opportunities lying ahead of us as we are progressing to re-open our operations globally, continuing to focus on commercial and operational excellence, on further diversifying our business and accelerating growth,” said Diaz, also touching on the importance of sustainability, social engagement, Diversity & Inclusion, and gratitude to its employees, management and business partners.