PARIS — Dufry Group, the world’s largest travel-retail operator, posted a 71.1 percent sales decline in 2020, as travel restrictions due to the coronavirus pandemic kept passenger traffic to a minimum.
On an organic basis, company sales in the 12 months declined 69.8 percent on-year to 2.56 billion Swiss francs, or $2.74 billion.
Dufry’s results are a bellwether of how hard the travel-retail industry’s business has been hit by the COVID-19 crisis, as travel in most parts of the world ground to a complete halt. How quickly the channel resumes operations, and people begin taking trips again, will have a major impact on the business of luxury fragrance and beauty brands, which comprise travel retail’s number-one product category.
By the end of February, practically 55 percent of Dufry’s stores were open, representing 60 percent of sales capacity.
“With the successful financing measures implemented in 2020, the support of existing and important new shareholders, the finalization of our reorganization as well as the financial and managerial flexibility to engage in strategically relevant initiatives and growth opportunities, Dufry is well positioned to drive recovery and growth acceleration beyond the current crisis,” said Julián Díaz, chief executive officer of Dufry, in a statement released Tuesday.
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In January, Dufry unveiled a cooperative agreement with Hainan Development Holdings, marking its first involvement in mainland China. From this partnership, the first shop to be opened, on Jan. 31, was the Global Duty Free Plaza at the Mova Mall in Hainan’s capital Haikou. Hainan is a Chinese island where nationals may travel to shop with handsome tax breaks granted by the government.
Looking ahead, in light of its reorganization and restructuring efforts, Dufry expects to have a savings of recurring fixed cost of around 400 million francs, of which about 280 million francs will come from personnel expenses.
At the end of February, around 1,300 Dufry shops were open. And by the end of this month, the group expects to operate approximately 60 percent of its shops, which generate 65 percent of the group’s sales capacity.
“In February, Dufry estimates organic growth to have reached [minus] 77 percent compared to February 2019,” the company said. “Dufry expects an improvement of the business in 2021. However, visibility on the shape and pace of the recovery is still limited.”
Dufry envisages a return to 2019 profitability and cash generation levels before there’s a full turnover recovery.
“Industry associations are estimating a full recovery of passenger numbers to a 2019 level between the end of 2022 and 2024,” Dufry said.
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