SWITZERLAND. “We are certainly not where we want to be yet, but the high demand for travel retail and the unique shopping experience offered by our operations give us confidence for the months to come.” That was the candid view of Dufry Group CEO Julián Díaz today as the travel retailer posted H1 2021 results that both underlined the sustained and severe nature of the crisis but also offered considerable cause for optimism as a recovery of sorts gains momentum.
First-half turnover reached CHF1,187.2 million (US$1,290.4 million) – down -69.5% in organic terms over the same period in pre-pandemic 2019 – in what the travel retailer described as “a business environment characterised by gradual improvements.”
“We continue to be in discussions with our airport partners and other landlords to align on concession structuring for locations experiencing still lower passenger numbers. As of July, we have signed CHF495.4 million reliefs for 2021.” – Dufry Group CEO Julián Díaz
Operating performance improved from a loss of -CHF932.6 million in H1 2020 to -CHF368.5 million this time. The pre-tax result saw an almost halving of losses to CHF549.6 million from CHF1,045.0 million in H12020.
The business was aided by re-initiation of travel in the US, Central America and parts of Europe, Middle East & Africa (EMEA), Dufry said.
The company upgraded its savings scenarios for personnel and other expenses for FY2021 and has signed additional Minimum Annual Guarantee (MAG reliefs).
Díaz said: “The first half of 2021 was characterised by a slow start due to ongoing restrictions. However, with the progress on vaccination in many parts of the world and the implementation of supportive travel protocols, Dufry sees clear signs of recovery in the respective regions.
“Net sales for July were already back at a level of -50.4% compared to 2019. Even more positive was the performance in the re-opened regions with the US reporting -23.9%, Central America and Caribbean (excluding the cruise business) -17.6% and the Mediterranean region, Eastern Europe and Middle East -32.3%, all compared to 2019.
“The re-organisation of our company is implemented with an aligned regional set-up reflecting internal decision-making and operations – visible as well in our external reporting structure – and most importantly with refined processes and new ways of working allowing to generate continued efficiencies.
“Our changes are reflected in CHF510.3 million personnel and other expense savings during the first half 2021, with the expectation to reach up to CHF730.0 million for the full-year.
“We continue to be in discussions with our airport partners and other landlords to align on concession structuring for locations experiencing still lower passenger numbers. As of July, we have signed CHF495.4 million reliefs for 2021.
“At the same time, we are working together on improving commercial concepts and enhancing the customer experience in our locations.”
Díaz said that the company’s focus continues to be on cash management, noting that cash flows had turned positive in both May and June.
Dufry is in a position to upgrade the Equity Free Cash Flow scenarios provided to the market earlier this year and is now expecting CHF -30 million cash consumption on average per month in a -55% turnover scenario compared to 2019, and for cash flow to turn positive in a -40% scenario.
“The tight control of our performance with respect to costs and cash flow contributed to a strong liquidity position of CHF2,172 million as of end June 2021,” Díaz continued.
The company has concluded the refinancing of around CHF1.6 billion of upcoming maturities with a “well-diversified product mix to achieve best-possible terms”, he said.
“We are now in a position to focus on re-openings and opportunities to drive recovery and growth,” Díaz pledged.
“We have already engaged in opportunities during the first half of the year with new concession wins and relevant contract extensions, for example in Brazil, Martinique, French Guiana, Jamaica, Dominican Republic, UK and several locations in the US, including the innovative Hudson Nonstop stores featuring Amazon’s Just Walkout Technology for a seamless and convenient customer experience.
“This initiative is part of a broader roadmap for further store digitalisation, which also includes projects for digital engagement throughout the full customer journey.
“Our collaboration in Hainan, China [with Hainan Development Holdings -Ed], already features such a combination of physical store excellence and digital engagement and we are progressing well in the opening up of an additional 30,000sq m of retail space in the second half of the year.
“We are positive on the opportunities lying ahead of us as we are progressing to re-open our operations globally, continuing to focus on commercial and operational excellence, on further diversifying our business and accelerating growth.
“Thereby, sustainability is at the core of the Dufry strategy implementation and we are further driving our environmental, social and governance (ESG) engagement – now also supported by a dedicated leadership position for Diversity & Inclusion.”
Díaz concluded: “My gratitude goes to our employees and management teams for their ongoing dedication and commitment; to our business partners for their continued support; and to our customers for whom we intend to provide a world-class, worldwide travel retail experience.”
