Gebr. Heinemann turnover climbs to €2.1 billion in 2021 as group returns to profit

Gebr. Heinemann is anticipating a return to 75% of 2019 sales levels this year (company headquarters in Hamburg pictured)

GERMANY. Leading travel retailer and distributor Gebr. Heinemann today revealed annual results for 2021, with turnover climbing +31% year-on-year to €2.1 billion. Crucially, the year saw a return to profitability (before foreign exchange effects) after the sharp downturn in 2020. The company revealed the details during its annual press conference today (a full report will follow).

For 2022, the Hamburg-based company is forecasting that it will reach 75% of 2019 turnover, or around €3.6 billion, alongside “solid profitability”.

The final result was due to three key reasons: Gebr. Heinemann continued its cost management measures in 2021, further savings were achieved through negotiations with business partners, and government coronavirus support measures in several countries were added.

Within the 2021 numbers, 76% of turnover came from retail, 20% from distribution and 4% from other services.

Key turnover figures from Gebr. Heinemann for 2021; click to enlarge

By region, Europe (including Germany) accounted for 84% of sales; by channel, airports represented 73% of the business with borders at 13%. Liquor, tobacco & confectionery took the largest share of sales by category at 52%, with P&C at 33% and fashion, accessories, watches & jewellery at 10%. On the major highlights of last year, Chief Operating Officer Raoul Spanger noted key airport contracts won in Norway, Bologna and Lviv (which is currently closed due to the war in Ukraine; see below). He commented: “Norway was a real milestone for our company in this crisis, almost like a fast forward button.”

Gebr. Heinemann opened a total of 19 new shops in 14 countries in 2021 – at airports, border crossings, on cruise ships and ferries as well as in downtown Macau.

Speaking at the annual press conference today were (second right) CEO Max Heinemann, (second left) COO Raoul Spanger, (right) Chief Commercial Officer Dr. Dirk Schneider and (left) Head of Corporate Communication Nina Semprecht. The senior team is also pictured below. 

Spanger added: “Although we continued to miss Asian travellers in Europe in 2021, their absence did not have as big an impact on spend per passenger as we had expected. Travel retail is on a healthy footing. Fewer people are travelling, but the propensity to buy continues unabated and many travellers are even spending significantly more money than before the crisis.”

On the wider picture, Spanger added: “Our strongest markets [in 2021] were Eastern Europe and South-Eastern Europe, especially the airports in Kyiv, Moscow, Istanbul and Tel Aviv. We developed significantly stronger there in 2021 than in Northern and Central Europe. The development from 2020 continues: the lower the complexity of a location, the faster it returns to growth while complex hubs with less direct traffic and many destinations have a hard time.

“Our strong multichannel approach was very supportive throughout the year. 2021 also confirmed again how important it is to stand on two strategic pillars with retail and distribution – this way we remain stable and independent of single markets.”

Commenting further on how 2022 was shaping up, Spanger said that Q1 sales had reached around 67% of 2019 levels. He said that Istanbul and Sydney were among the operations to have outperformed budget, with the latter now already at 30% of 2019 business. Management said that revenge shopping and higher than pre-pandemic average spends were factored into expectations for 2022, but were not likely to be maintained to the same level in 2023.

The company highlighted some key contract gains and extensions over the year (see chart); click to enlarge

The company also commented on the Russian invasion of Ukraine, both key markets in which Heinemann employs many people. Heinemann has suspended all deliveries to Russia, which it acknowledged would affect both distribution and retail.

Max Heinemann said: “As a global travel retailer this is part of our responsible corporate governance. As Europeans with all our hearts we take pride in being a multi-cultural organisation. We will carefully analyse how the situation develops.”

In the annual report, Max Heinemann further stated: “First and foremost, it is a humanitarian disaster. We have been operating in Ukraine and Russia for many years. We are shocked by the events and, above all, very worried about our employees and their families. A big thank you goes to our staff in the countries neighbouring Ukraine who have already done so much to help their colleagues. And we are trying to do something similar from Hamburg.”

Gebr. Heinemann combines its Annual Business Report with its Corporate Responsibility Report

Addressing the impact of global supply chain challenges, Chief Commercial Officer Dr. Dirk Schneider said: “Thanks to our data and experience-driven, accurate demand planning, we built up stocks early and with foresight. This enabled us to get through the difficult phase in the fourth quarter relatively well. Still it has been a tough quarter given the global manufacturing and supply challenges. We expect the situation to ease in the second half of 2022.

“Until then, we will communicate bottlenecks transparently and try to meet the demand of travellers and distribution customers with alternative products. One thing is certain: this phenomenon is global. Products that we do not have access to are not available to anyone else in the market. But thanks to our close relationship with suppliers, we can assume that we will be supplied first as soon as products are available again.”

On the company’s view of investment in an uncertain trading climate, Chief Financial Officer Stephan Ernst said: “We think long term and see ample opportunities for growth with a view to new markets and partnerships. On the financing side, we have sufficient room for growth opportunities, and we are willing to invest. However, the course of the crisis has shown us how fast situations change and how unpredictable even a mid-term outlook can be.”

Max Heinemann added: “Covid-19 has sharpened our instincts that nothing can be taken for granted anymore and we should always be prepared to deal flexibly with volatilities. At the same time, one thing is certain for us: whenever a meaningful opportunity for growth arises for us, we should also be able to seize it. Because it is one of our principles that we want to create change. We want to proactively develop the industry together with our partners. And we should also dare to take on this role quite clearly.”

Investing for the future: One of the most recent Gebr. Heinemann store openings, at Berlin Brandenburg T2

Discussing how the industry has changed, Raoul Spanger said: “What has definitely changed for us is that we need contracts with more flexibility.

“Especially with the airports, we had long and sometimes difficult discussions about conditions and new contract models. In the end, we reached good compromises in a spirit of partnership. However, large marketplaces will continue to be highly competitive in the future and we must be prepared for complex requirements and evaluation systems such as those in the Norway tender to become the norm.”

As reported, Gebr. Heinemann recently presented an updated vision and mission that will guide its future. Elaborating, Max Heinemann said his mandate was to rethink the company’s previous mission statement and to translate it for the future.

Family values: Gebr. Heinemann recently revealed its new vision and mission. Pictured are Claus Heinemann, Max Heinemann and Gunnar Heinemann.

“Our vision is that we turn travel time into valuable time as the most human-centric company in global travel retail. With our vision we manifest our corporate culture: the ultimate focus on people, on humans. This is what defines and differentiates us in global travel retail and what can be decisive for potential new partnerships in and outside our industry.

“We are a family business – more human, more passionate, more reliable, more accessible and faster than others. Our business partners and travellers will feel this typical Heinemann personality, worldwide and physically as well as digitally. In this way, we can offer travellers around the globe even more entertaining, inspiring and sustainable shopping experiences. Or in the words of our vision: transform travel time into valuable time.”

In the Annual Report, he stated: “We want to be accountable and take on clear responsibility. Putting people at the centre frames a specific way of behaviour. We intend to put this into practice and to set an example. Knowing who our vis-à-vis is and showing interest in that person is enormously important. Especially in times like these, anonymity is our biggest enemy.”

He added: “On the one hand, we have proactively positioned ourselves as a company that implements sustainability in all facets and is happy to take on a leading and authentic role in the industry.

“On the other hand, we worked on reviewing, refining and reconfirming our group’s focus. We developed a new mission statement, which will give and manifest orientation and will become clearly visible to all in the future.

“At a time like this, a reshaped and refocused mission statement is a strong signal, both for our group itself and for our partners. This underscores the fact that we as a company are looking at the next ten to 15 years.”

Gebr Heinemann recently launched a new concept called “future friendly: Great for you. Better for the planet” on its online webshop and at airport stores in Berlin, Frankfurt and Hamburg

A key element of the new mission statement is the sustainable impact, which has been anchored as a promise to travellers. Gebr. Heinemann has formulated its own Sustainable Development Goals for the ecological and social fields of action resulting from Gebr. Heinemann’s global activities, which it aims to achieve by 2030.

One example of the implementation of this strategy is the sustainable category concept for responsible shopping, which Gebr. Heinemann said it was the first travel retailer worldwide to develop. As a first step, a ‘future friendly’ seal identifies products with sustainable packaging and materials in the shop. This year, the company will add further sustainability features. 

As reported, from 1 July, Stephan Ernst will hand over the position of Chief Financial Officer (CFO) on the Executive Board to Dr Kai Deneke, who is currently Director Controlling. The CFO is responsible for Finance, IT, Procurement and Facility Management.

“We sincerely thank Stephan for advancing our company with his constructive manner and look forward to continuing our relationship in a spirit of friendship outside of daily business with him,” said Max Heinemann. “As a family business, we are very proud to be able to optimally fill the CFO position from our own ranks.”

*More details and commentary to follow soon.

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