• December 3, 2022

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Demand for leisure air travel in Europe has continued to buoy Dufry’s post-pandemic retail recovery, with the Europe, Middle East and African (EMEA) region now on par with the Americas when it comes to their performances versus pre-pandemic times. Meanwhile the travel retailer is pushing for a new retail model for the U.S.

Dufry—which currently has just over 2,000 stores open, the vast majority in the western hemisphere—saw third quarter turnover rise by 58.6%* to hit 2.12 billion Swiss francs ($2.01 billion) versus the same period in 2021. Much of the rise was thanks to a sharp rebound in European air travel—at 88% of pre-pandemic summer volumes according to airports association ACI Europe. This has been instrumental in fueling sales in duty-free shops across the continent, especially in Mediterranean tourist markets.

Vacation travelers in the summer helped lift the EMEA region by 86%, compared with the Americas’ 52%, as tourists flocked to leisure destinations like Turkey, Greece, and southern Europe. This was despite flight disruptions and capacity cuts seen right across European airports during the period. Also performing well were the Middle East and Africa, driven by the leisure market as well.

Xavier Rossinyol, CEO of Dufry Group, said in a statement: “We continued to see strong demand during the third quarter at attractive margins. In particular, holiday destinations in the Mediterranean region, Southern Europe, Middle East, Central America and the Caribbean were driving our performance.”

He added: “The United States remained strong, with South American countries having traded upwards. Even in Asia Pacific, we saw an increase in activity, specifically in Australia and parts of South-East Asia.” However, that increased activity needs to be taken in context.

While Asia Pacific did record the highest year-over-year growth for any region in the quarter—up by 115%—it comes off a small base and amounted to $50 million revenue. This is against Europe’s $1.19 billion and the Americas’ $803 million over the same period. Also, and importantly, when comparing the regional recovery trends versus 2019, EMEA and the Americas were almost fully recovered in Q3 at 93.9% and 93.8% respectively, while Asia Pacific stil has plenty of work to do at 31%.


Will strong start to the holiday season last?

Rossinyol said that even with the various negative factors that could affect travel and duty-free purchasing power, for example rising inflation, energy prices, foreign exchange volatility and geopolitical uncertainties like the Russia-Ukraine war, “we continue to see strong demand into the fourth quarter.”

Estimates for October in EMEA and the Americas put Dufry’s sales at 101% and 94% of 2019 levels. This is a good start for Q4 though the external factors outlined above could be a drag into the holiday season. Dufry has therefore been cautious and has forecast full-year turnover of $6.56 billion, still some way off the $8.73 billion it generated in 2019.

Dufry released its Q3 results on Wednesday after the Swiss market close and just before the company embarked on a U.S. Roadshow in New York, Boston and San Francisco. In an investor call from New York, Dufry’s chief financial officer Yves Gerster pointed out that the company’s net debt had decreased ahead of plan and was $2.74 billion, the lowest level since march 2015. He added: “The combination with Autogrill will further reduce our net debt position.”

Rossinyol also reminded investors that the company’s five-year ‘Destination 2027’—revealed in detail in London at a Capital Markets Day in September—would be keenly focused on travelers. He said: “We will be absolutely traveler-centric. That will affect our physical retail, and the combination with Autorgrill is absolutely strategic to (bring) not only travel retail but also F&B (food and beverage) to the airport.”

The tie-up with Autogrill—the deal closes in the first half of 2023—will give Dufry, which owns Hudson, leadership in the American travel retail market. Given that scale, Dufry has said that it it is “engaging with airports in the region on combined travel retail and F&B offerings.” If the negotiations are successful, it is possible that the company could be announcing a new mixed retail model soon.


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