TOP 10 OPERATORS 7: DFS GROUP
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TRBusiness The Angkor T Galleria by DFS in Cambodia.
the leading global operators as TRBusiness confirmed in August. As reported by Andrew Pentol, Korean duty free powerhouses, Lotte Duty Free (No 2 in our top 10 ranking) and Shilla (No 3) submitted bids for the Singapore Changi liquor and tobacco (L&T) contract. In addition to the Korean duo,
TRBusiness can confirm Gebr. Heinemann, which has a strong Asia Pacific footprint at airports such as Hong Kong, Sydney and Kuala Lumpur International (KLIA2) is also participating in the tender.
Informed decisions made Of course this is DFS Group’s second withdrawal from a major Asian hub announced in the space of two years. As many will remember, DFS
waived its right to take up its three- year extensions for its separate five- year liquor and tobacco, general merchandise and perfume & cosmetics concessions at Hong Kong International Airport in 2016. However, in 2017 the then CEO
Philippe Schaus told TRBusiness it bid ‘at the right level’ for the P&C tender. “First of all we decided not to bid
on the liquor and tobacco; we bid on beauty,” said Schaus at the time. “I think the process was managed very well by the airport…We have a considerable insight on what’s happening in this part of the world; what’s happening with the travellers; what’s happening in China with the new policy of the government; what’s happening to travel retail and the luxury industries and what’s happening here in Hong Kong. “So using that insight we bid at the
likelihood that somebody else would bid well above that, which is what has happened. So no bad feelings, we wish of course the Shilla team a lot of success in this new operation.” It is easy enough to draw parallels
between Schaus’ comments here about HK and those issued by Brennan regarding Changi. The company certainly benefited from the wisdom gained from years of operating in both locations; experiencing the ups and downs during various economic crises and boom periods. All of this allowed them to very accurately weigh up the value of the business in both airports. The more recent scenario also
adds weight to existing evidence of DFS Group’s shift in business focus away from airport duty free in favour of its downtown stores (T Gallerias). Its parent company LVMH, is Official Partner
In the remainder of this year DFS is looking to complete renovations of its flagship stores in Hong Kong, Macau and San Francisco International Airport while opening a beauty store in the Mong Kok district of Hong Kong.
Hennessy Louis Vuitton’s 2018 financial statements, the luxury group’s Selective Retailing Division, which includes DFS, posted organic revenue growth of +6% in 2018. At the time it said that the closure
of the loss-making Hong Kong Airport concessions at the end of 2017 contributed to the rebound in profitability. According to the company, DFS
progressed strongly thanks to particularly good performance in Hong Kong and Macau. Gallerias in Cambodia and Italy also enjoyed rapid growth. LVMH Group revenue reached
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€46.8bn ($53.5bn) in 2018, an increase of +10% on the previous year, while organic revenue grew +11% (+12% excluding the closure of the Hong Kong Airport concessions at the end of 2017). Bernard Arnault, Chairman and
Established 1998
certainly choosing to put a positive spin on its exit from Changi, as it did from HKIA in 2017. Looking back over LVMH Moët
CEO of LVMH commented on the group’s 2018 performance: “LVMH had another record year, both in terms of revenue and results. In particular, profit from recurring operations crossed the €10bn mark.” According to numerous reliable sources, TRBusiness estimates that
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level which we thought was the right one, knowing that there was a high
OCTOBER 2019
DFS said it bid ‘at the right level’ for the P&C business at Hong Kong Airport. Shot taken in 2017 prior to their exit.
TOP 10 OPERATORS 57
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