GERMANY. Leading travel retailer and distributor Gebr Heinemann is targeting 70-80% of 2019 turnover next year, assuming the reopening of travel markets continues to gather pace.
Speaking to The Moodie Davitt Report (the full interview will appear in The Moodie Davitt Magazine for October), Chief Operating Officer Raoul Spanger was cautiously upbeat about prospects for the final quarter of 2021 and about further uplift in the business in 2022.
He said: “For 2022 right now, we are looking at between 70% and 80% of [2019] turnover. This is realistic based on what we see today. The gap between the two [70% and 80%] will depend on how air corridors from Asia are created, such as Germany-Singapore which is now a ‘travel bubble’. So if we get more flights like the one from Frankfurt to Singapore, which is quite good business, then we are looking at 80% of 2019. If it’s fewer of these routes, it will be closer to 70% most likely.”
While some uncertainty remains about the months ahead, business has picked up over the Summer across key European markets as travel has returned.
Spanger said: “What we can see from booking rates is that October will be an excellent month, with international travel gaining momentum, and this will in turn greatly lift turnover. What is more difficult overall is to foresee how the months ahead will play out.
“But at least most airports in Europe are now open. Around 75% of shops are open, some for a few hours, and it is coming back. Overall we have more positives than negatives and after a solid quarter three we look forward to quarter four. Through to mid-year we were at around one-third of 2019 sales, but that has recently risen to 60% of turnover.”
This improvement followed a slow start to the year, with Heinemann sales closer to one-third of 2019 sales rather than the budgeted 50% in the first half. That was due to the spread of COVID-19 variations, related lockdowns, and in Heinemann’s case, the lack of almost any international travel in the vital Norwegian market until recently.
“Norway has helped as the situation is improving every week,” says Spanger. “From 10% of previous business in June we have hit 40% and turnover is jumping over the past few weeks. We expect 50% [of 2019 turnover] in Norway in October. If Norway isn’t working as it should it has an impact on the whole business. Now we see, as elsewhere in Scandinavia, the pandemic has more or less been declared over. And these travellers are high spenders and make such a big difference. Average transaction rates and penetration are very positive, and this suggests that duty free is as popular as it ever was, which we like to see.
“Overall, we are expecting a more long term recovery. We had a firm goal of turnover reaching 50% this year compared to 2019. We will come in under that but not by much, we believe. We are really catching up now.”
In 2019 Heinemann turnover reached €4.8 billion, falling -67% in 2020 year-on-year to €1.6 billion. Retail turnover last year fell by -68% to €1.2 billion, with the distribution business down by -57% to €400 million.
*The full interview will appear in The Moodie Davitt Magazine for October, which will appear to coincide with the Virtual Travel Retail Expo (October 11-15).
