Travel Retail and Duty Free Business Intelligence    Friday 28 November 2014

GIFTS, CRYSTAL AND CHINA

Dubai Duty Free profitability holds up well despite economic downturn and Terminal 3 transition – 28/04/09

Published: 28/04/09

Source: ©The Moodie Report

By Martin Moodie

UAE. Dubai Duty Free’s sales have slipped marginally during the first four months of 2009 due to the economic downturn. But Managing Director Colm McLoughlin said he is pleased with the way the retailer has held up in a tough environment and that he is confident about trading prospects.

In an interview with The Moodie Report this week, he revealed that sales were down by -4.7% year-on-year for the period to 26 April. For the month of April to date, sales were down by -5.6%

Fashion has benefited from increased space at the new Terminal 3 and sales are rising
“We are taking that in the context of being +23% up last year [at this stage] over the year before, and listening to what is happening everywhere around the world we think it’s really good,” McLoughlin said.

The retailer has been monitoring costs closely, for example freezing recruitment, to protect profitability. “I’m happy that our bottom line is marginally up on last year. For the first three months our P&L is good," he said.

Passenger traffic at Dubai International Airport was up +2.0% year-on-year in the first quarter; with Emirates (the sole occupier of the new Terminal 3) generating an increase of +7.3%. That terminal now generates 53% of Dubai Duty Free's sales.

Gold sales are down in 2009, reflecting the economic climate, though jewellery has performed well
Gifts from Dubai has also seen soft sales in the wake of slowing passenger numbers


Commenting on overall consumer trends in T3 McLoughlin noted: “We find the sale per head is better there than elsewhere; our sales per head this year is better than last year; and our average sale per transaction this year is better than last year, but the number of transactions we’re doing are less.”

Performance is varying sharply by category. Some luxury areas are down – notably watches and clocks, as are consumer technology, pens, Gifts from Dubai, news and books, lighters and gold. Perfumes and cosmetics is each down -7% year-on-year, though it is worth noting that sales last year in these key categories were up by over +30%.

But other sectors such as liquor, confectionery, ladies’ fashion (benefiting from more space at T3), costume jewellery, precious jewellery, destination merchandise, foodstuffs, confectionery and tobacco have reversed the trend.

McLoughlin said he was optimistic about prospects. “Emirates have announced additional flights, for example, and have increased their frequency to certain places in the last couple of weeks.”

Looking forward he said: “I’d hope we would maintain the present level of business or increase it. There is tweaking going on in our new terminal and I think the more of that we get done the better it will be. I’m optimistic for the year.”

The full interview with Colm McLoughlin appears in the next issue of The Moodie Report Digital Print Edition, out next month.

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