ARI targets a further €50 million in profits; aims to drive average spend higher across global retail estate

IRELAND. Aer Rianta International (ARI) is to target an additional €50 million in profits over the next four years, after hitting €24 million in 2016. That’s according to CEO Jack MacGowan, speaking to The Moodie Davitt Report this week after the Irish state-owned travel retailer revealed its annual results. [The full interview will follow shortly.]

Jack MacGowan: Focus on average spend across ARI’s global estate

As reported, ARI’s share of after tax profits from its operations and joint ventures outside Ireland increased by +11% year-on-year in 2016. Profits from its overseas retail operations alone (excluding ARI’s 20% stake in Düsseldorf Airport) climbed by a robust +17%.

In Ireland, sales at The Loop, Dublin and Cork airports in 2016, including retail and food & beverage sales by concessionaires, amounted to €302 million (+11%). Sales at ARI’s directly-operated stores in Ireland increased by +10% in the same period.

MacGowan said: “We’re ahead of where we thought we would be. Key factors driving profitability are like-for-like sales growth and some small improvements in gross margin. Our managed turnover is now €1 billion, +10% higher than last year.”

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The task now for ARI, he said, is to continue to provide a compelling case to airports about its ability to drive average spend and consumer satisfaction.

“We have hit our target to double profits one year ahead of schedule and we have tripled international profits over the past four years. Our strategic plan is to add €50 million in incremental profits. But more than that, we want to build a team that can deliver higher passenger average spend than our competitors, deliver better average margin through improved buying supplier deals, and ensure that our business expansion is ahead of the competition.

“We do it in places but we don’t do it every day in every location. That is our target. We want to show consistency of over-performance against our competitors in passenger average spend and in average margin. That is the core reason for us winning contracts recently. We need to show we can do the job better than anyone else.”

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MacGowan also hailed ARI’s improved track record in business development over the past two years, especially in the Middle East market, where it remains the biggest multi-location travel retailer.

“We have really stepped up in the Middle East, with our local partners. We have won Abu Dhabi, Muscat and now Beirut (with partner Phoenicia) and we have doubled our average concession term in the Middle East. We have long-term concessions there today, which offers us strong tenure for the future.”

The company’s Canadian business posted single digit growth in 2016 (shops at Montreal Airport pictured)

The company’s ambitions extend to other markets too. “In terms of our footprint and growth, we’ll look carefully at Asia for the future. If we secure more business of scale in the next three years or so that would not be a surprise. We are ready to compete. We are not challenging for the very large concessions at Hong Kong or Changi but other locations are attractive. The bigger question for us is how we develop our North American and European business and we’re looking at that now.”

*The full interview with ARI CEO Jack MacGowan will appear shortly.

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