More flexible travel and fewer, or less stringent, travel bans enabled the Americas to gain greater prominence at Dufry, the biggest airport retailer in the world, as business in Europe, Middle East and Africa declined by 73% last year, and by more than 80% in the final quarter.
As a result, the Americas’ share of sales in 2020 leapt six percentage points to 45%, putting it almost on par with EMEA’s 46%. The Swiss company—which merged the previously NYSE-listed subsidiary Hudson Group HUD last summer—saw Americas sales decrease by just over 65% last year.
Americas’ relative buoyancy means that Dufry now has more exposure to domestic and intra-regional travel and less reliance on duty-free shopping, a plus point during the Covid-19 pandemic when international air travel has plummeted, and continues to do so this year. The duty-paid component of the group’s business has risen to 44% as duty-free slipped back to 56% (from 61% in 2019).
Those big shifts highlight the transformative nature of the pandemic, exposing both weaknesses and strengths in Dufry’s more than 2,400 store units which straddle airports, cruise ships, rail stations and duty-free downtown and border locations.
While the Americas showed some resilience, company revenue collapsed by 71% last year to $2.76 billion (2.6 billion Swiss francs) and net profit went from 30 million Swiss francs in 2019 to a loss of 2,740 Swiss francs. Shares in the company closed 3% higher today, near their high for the year-to-date, helped by several mitigating actions.
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Dufry restructured with a regional set-up in the past year; acted early to make cost savings of $1.4 billion; lowered cash burn to $50 million in the second half; and improved its liquidity position to $2 billion. This, the retailer says, will help in driving re-openings this year. But the retailer warned that “visibility on the shape and pace of the recovery is still limited.”
In a statement on Tuesday, CEO of Dufry Group Julián Díaz said: “We have succeeded in putting the company on solid financial ground and seized opportunities which provide remarkable growth potential and contribute to the future development of Dufry.”
Chinese steps, but Americas lead
Meanwhile a joint venture with Alibaba BABA to run travel retail in China and Dufry’s first store in Hainan at the Mova Mall in Haikou, should deliver some benefits this year. However the full store footprint of 420,000 square feet will not be ready until early 2022.
Based on where most shops have reopened so far it is the Americas that will lead what fragile recovery Dufry hopes to make this year. By February—in line with travel restrictions and resumption of operations by airports and other landlords—Dufry had 1,300 shops up and running globally which represent around 60% of sales capacity.
Most of them—at over 600—are in U.S. airports such as Atlanta, Denver, Miami and Tampa, many through Hudson which has also just opened a store with Just Walk Out technology from Amazon AMZN . Another 300 are in Latin American markets like Chile and Colombia while EMEA only had 324 shops open by February, and Asia Pacific just 37.
In total, 72% of Dufry’s open estate is currently in the Americas and the region will be doing the heavy lifting until the European market—where many of Dufry’s large duty-free stores are based—gets back on its feet.
Source: Forbes – Business