PARIS — Dufry Group, the world’s largest travel-retail operator, posted an 80.5 percent sales decline in the third quarter, as travel restrictions due to the coronavirus pandemic kept passenger traffic low.
On an organic basis, sales in the three months ended Sept. 30, which reached 487 million Swiss francs, or $533.8 million, dropped 79.9 percent.
Dufry’s quarterly results are a bellwether of how hard the travel-retail industry’s sales have 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 beauty brands, which comprise travel retail’s number-one product category.
In the third quarter, Dufry’s sales in the Asia-Pacific region were down 89.6 percent, while they dropped 83.8 percent in Central and South America, and sank 80.1 percent in the Europe, Middle East and Africa zone.
Julián Diaz, Dufry Group’s chief executive officer, in a statement published Tuesday pointed to three reasons the group is in better shape now than it was three months ago.
“First, we have reached final stages in the implementation of our restructuring initiatives and group-wide reorganization, which include the full reintegration and delisting of our Hudson business in North America, which we expect to close in the fourth quarter of this year,” he said.
“Besides adding agility and simplifying the daily operational management of the company, these initiatives will allow us to reach significant cost reductions of 1 billion Swiss francs in 2020, of which at least 400 million francs are resilient structural savings also enduring in 2021 and beyond,” he continued.
Second, Diaz spotlighted the successful execution of the rights issue, with Advent International and Alibaba Group taking a minority stake in Dufry, which generated total gross proceeds of 890 million francs, and strengthened the operator’s financial position and increased its flexibility to act on growth possibilities.
As a third reason, Diaz pointed to the collaboration with Alibaba, with which Dufry is establishing a joint-venture company in China.
“[It] will not only allow us to further develop travel retail in China, but also to accelerate Dufry’s digital transformation globally,” the executive explained.
Diaz said Dufry’s business and the travel-retail industry remain exposed to the macroeconomic situation and travel restrictions due to COVID-19. Dufry noted an uptick of travel in July and August, which plateaued in September, when there were increased quarantines in some countries.
In the first nine months of the year, sales at Basel, Switzerland-based Dufry, which operates 2,500 stores, declined 69 percent to 2.07 billion francs. On an organic basis, the group’s sales were down 67.8 percent.