Rising Revenues for World’s Largest Airport Retailers Highlight Strengths and Weaknesses

The airport brands Dufry and Lagardère Travel Retail succeeded in significantly improving their turnover and cash flow during the quarter ended in September. They were helped by increase in bookings like high double vaccination rates In certain regions has resulted in a relaxation of travel restrictions.

French Lagardère increased its quarterly like-for-like revenue up 80% to 710 million euros ($ 810 million) compared to the same period in 2020 while Dufry climbed 142% to generate 1 350 million Swiss francs ($ 1.47 billion). However, compared to the third quarter of 2019, before the pandemic, both companies are still down, respectively 39% and 45% behind.

Although Dufry made a strong comeback from last year – and this was reflected in the uptrend in the Swiss company’s share price over the weekend – it’s Lagardère Travel Retail which had the best performance compared to the pre-pandemic period.

The more diverse mix of channels and sectors of French society contributed to the improvement in performance. For example, in 2020, the company had a fairly balanced weighting in its three main segments of essential travel (44%), duty-free and fashion (35%) and restaurants (21%) . And if geographically, the EMEA (Europe, Middle East and Africa) has the lion’s share – France (20%) and EMEA excluding France (43%) – its exposure is reasonable in Asia-Pacific (13%) and in North America (24%).

Dufry, on the other hand, is very limited in Asia-Pacific (and in China in particular) at 6% of sales, which has prevented it from taking advantage of Chinese domestic air travelers in the same way as Lagardère. Dufry is also biased towards airports (86% of sales in 2020), while its small European rival has a strong commercial position in train stations and metro stations with more than 600 locations. However, the Swiss group was strengthened by its strength in North, Central and South America (45% of sales) where markets such as the United States, Mexico and the Caribbean performed well.

Relatively close to normalization “

Dufry CEO Julián Díaz said in a statement: “We have seen continued progress in the United States and Central America, including the Caribbean. For October, we are even relatively close to normalization. For example, Central America and the Caribbean is trading at 90% (compared to 2019). ”

Regarding third quarter growth, he added: “The largest adoption has taken place across EMEA as vaccination campaigns progress and authorities have started to focus on aligning travel protocols and the practicality of the measurements. “As a result, Dufry’s trade in October in the Mediterranean, Eastern Europe and the Middle East is 89% of 2019 levels.”

For Lagardère Travel Retail, the star of the third quarter was North America with 172% year-on-year revenue growth, driven by what the company called a “sustained recovery in domestic flights in the United States. United ”compared to the second quarter. to.

Asia-Pacific revenue was up 52%, driven by strong momentum in Greater China (+ 65%), despite blockages in certain regions of the country in August and September. This made up for the rest of the Pacific region which remained largely closed during the quarter. Lagardère Travel Retail is also strengthening its position in Asia with an equity merger, finalized on September 30, with e-commerce expert JD.com.

Revenue in the EMEA zone (excluding France) jumped 53% in the wake of the easing of travel restrictions across the continent. while French sales jump by 78% thanks to the increase in passenger traffic in stations and airports during the summer.

Other highlights of Dufry’s third quarter include:

  • About 1,850 stores, or about 84% of 2019 sales capacity, have reopened.
  • After negotiating to bring concession fees in line with pandemic conditions, minimum annual warranty (MAG) relief for 2021 is expected to reach $ 1.16 billion thanks to a law change in Spain, a big deal for Dufry.
  • Net debt fell to $ 3.37 billion, reaching the same level as in September 2019 with what Dufry says is “sufficient liquidity” of $ 2.56 billion to stimulate reopenings and accelerate growth.
  • October sales are trending 61% of 2019 levels.

In the case of Lagardère Travel Retail, the liquidity position of its parent company is also solid at $ 2.2 billion (in cash and temporary investments) and an undrawn amount of $ 1.27 billion in revolving credit.

The two companies will now seek to capitalize on the reopening Europe-U.S. international air links, which should bring some spendthrift US travelers to major European markets during the winter season and help increase vacation sales.


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