CHINA. China Duty Free Group (CDFG) has posted a dazzling first quarter performance, building on a tremendous year in 2017 when it generated a +69.25% increase in sales.

China’s travel retail giant generated an +89.62% revenue rise year-on-year in the quarter to CNY6.43 billion (US$1.02 billion). Net profit rocketed by +52.46% (see table).

Source: DutyFreeExpert; The Moodie Davitt Report (DutyFreeExpert and The Moodie Davitt Report have an informal alliance to share information and champion the advancement of the Chinese travel retail market at home and abroad).

Parent group China International Travel Services (CITS) posted a +53.07% revenue increase to CNY8.849 billion (US$1.41 billion) in Q1. CITS’s net profit climbed +61.48% to CNY1.16 billion (US$184.1 million).

CDFG benefited from the rapid growth of its new duty free business at Beijing Capital International Airport (its 2017 acquisition of 51% of rival Sunrise Duty Free’s Beijing business was consolidated as of 1 April 2017). Other positive factors included strong growth at the acclaimed Sanya International Duty Free Shopping Complex and the retailer’s new liquor/tobacco/gourmet foods joint venture concession at Hong Kong International Airport (HKIA) with Lagardère Travel Retail (trading as Duty Zero). The Grand Opening of the completed HKIA store network is set for 12 July.

Strong results: CDFG’s departures duty free concession at Guangzhou Baiyun Airport Terminal 2 was one contributor to the positive overall performance

Building off a buoyant baseline

CDFG President Charles Chen has overseen impressive growth at the company

2017 was a landmark year for CDFG, led by President Charles Chen*. The retailer generated duty free revenues of CNY14.861 billion [US$2.34 billion], up +69.25%. Total revenues, including duty paid, rose +66.55% to CNY15.62 billion (US$2.479 billion).

CDFG  secured a number of key breakthroughs in the period. As reported, the company triumphed in the Beijing Capital International Airport T2 duty free tender and snapped up 51% of rival Sunrise Duty Free’s Beijing operations. As exclusively reported by The Moodie Davitt Report, CDFG followed up that deal this February by acquiring 51% of Sunrise Duty Free (Shanghai) in a US$239 million acquisition.

CDFG also secured and began the HKIA concession, a huge strategic gain. Additionally, the retailer snapped up a string of airport arrivals duty free concessions in Mainland China last year and was awarded the departures duty free concession at Guangzhou Baiyun Airport Terminal 2 – China’s third-busiest airport.

High times in Hainan

CDFG’s Sanya International Duty Free Shopping Complex at Haitang Bay posted 2017 sales of CNY6.084 billion [US$956.1 million], an increase of +29.31% year-on-year. Most of that was duty free sales revenue (CNY5.86 billion/US$920.9 million), up +28.04%. The facility attracted 5.51 million customer visits and 1.31 million purchases.

CDFG attributed the Sanya increase to a combination of new brands, optimised product selection, enhanced efficiency and strong promotions.

*Footnote: CDFG President Charles Chen will deliver a keynote address and Q&A at this year’s Trinity Forum, to be held in Shanghai on 31 October and 1 November.