Luxury Travel Retailer DFS Group Unloads Hong Kong, Macau Outlets as Hainan Project Looms Over Its Horizon
In a significant move to consolidate its presence in the global duty-free and travel retail market, the majority LVMH-owned DFS Group has agreed to sell its entire portfolio of stores in Hong Kong and Macau. This strategic exit marks another major milestone in the company's restructuring efforts, which have been underway since last year.
With this transaction, China Tourism Group Duty Free (CTG Duty Free) is poised to expand its dominance in the Chinese duty-free market, where it has a 79% share. By acquiring DFS's stores in Hong Kong and Macau, CTG Duty Free gains leverage in the international travel retail arena, as these markets offer more visibility on the world stage compared to mainland China.
The sale of DFS's assets comes at a time when the company is grappling with declining sales and profitability. The DFS business has been struggling due to subdued post-Covid travel and spending from Chinese tourists, who are a vital shopper base for the brand. According to Forbes' real-time net worth tracker, billionaire Robert Miller's fortune has fallen by $3 billion since 2020.
CTG Duty Free is listed on both the Hong Kong and Shanghai exchanges and is controlled by China Tourism Group. The company will acquire DFS's stores in Hong Kong and Macau (excluding its City of Dreams operations) as well as intangible assets, including a series of DFS brands and intellectual properties for exclusive use in Greater China.
In exchange for the sale, LVMH and the Miller family – one of DFS's co-founders – will subscribe to CTG Duty Free's Hong Kong shares. This move is seen as a strategic effort by LVMH to rationalize its Selective Retailing division and maintain influence in China's duty-free ecosystem without the operational burden of DFS.
The partnership between CTG Duty Free and LVMH also includes a memorandum of understanding (MOU) that outlines a strategic retail cooperation. The MOU aims to leverage the respective strengths of both parties to drive product sales, establish boutiques, and enhance brand promotion. This cooperation is designed to align with LVMH's current business model and may prove an efficient route for the company to achieve success in China's duty-free market.
The Yalong Bay project in Hainan, a popular duty-free province, has also been put on hold as DFS reassesses its plans for the location. The decision marks another significant shift in the company's strategy, which has seen it close stores in Guam and Hawaii in recent months. These closures come amidst T-Galleria store closures or withdrawals of interest in New Zealand and Australia, plus Saipan, and Fondaco dei Tedeschi in Venice.
The DFS Group's disposals have been steadily shrinking its presence – and relevance – in the global duty-free and travel retail channel it once dominated. This latest move underlines the company's efforts to adapt to changing market conditions and maintain its competitiveness in a highly competitive industry.
In a significant move to consolidate its presence in the global duty-free and travel retail market, the majority LVMH-owned DFS Group has agreed to sell its entire portfolio of stores in Hong Kong and Macau. This strategic exit marks another major milestone in the company's restructuring efforts, which have been underway since last year.
With this transaction, China Tourism Group Duty Free (CTG Duty Free) is poised to expand its dominance in the Chinese duty-free market, where it has a 79% share. By acquiring DFS's stores in Hong Kong and Macau, CTG Duty Free gains leverage in the international travel retail arena, as these markets offer more visibility on the world stage compared to mainland China.
The sale of DFS's assets comes at a time when the company is grappling with declining sales and profitability. The DFS business has been struggling due to subdued post-Covid travel and spending from Chinese tourists, who are a vital shopper base for the brand. According to Forbes' real-time net worth tracker, billionaire Robert Miller's fortune has fallen by $3 billion since 2020.
CTG Duty Free is listed on both the Hong Kong and Shanghai exchanges and is controlled by China Tourism Group. The company will acquire DFS's stores in Hong Kong and Macau (excluding its City of Dreams operations) as well as intangible assets, including a series of DFS brands and intellectual properties for exclusive use in Greater China.
In exchange for the sale, LVMH and the Miller family – one of DFS's co-founders – will subscribe to CTG Duty Free's Hong Kong shares. This move is seen as a strategic effort by LVMH to rationalize its Selective Retailing division and maintain influence in China's duty-free ecosystem without the operational burden of DFS.
The partnership between CTG Duty Free and LVMH also includes a memorandum of understanding (MOU) that outlines a strategic retail cooperation. The MOU aims to leverage the respective strengths of both parties to drive product sales, establish boutiques, and enhance brand promotion. This cooperation is designed to align with LVMH's current business model and may prove an efficient route for the company to achieve success in China's duty-free market.
The Yalong Bay project in Hainan, a popular duty-free province, has also been put on hold as DFS reassesses its plans for the location. The decision marks another significant shift in the company's strategy, which has seen it close stores in Guam and Hawaii in recent months. These closures come amidst T-Galleria store closures or withdrawals of interest in New Zealand and Australia, plus Saipan, and Fondaco dei Tedeschi in Venice.
The DFS Group's disposals have been steadily shrinking its presence – and relevance – in the global duty-free and travel retail channel it once dominated. This latest move underlines the company's efforts to adapt to changing market conditions and maintain its competitiveness in a highly competitive industry.
like wut happened? they were supposed to be the big players in the chinese duty-free market but now it seems like theyre just trying to hold on 
meanwhile ctg duty free gets to expand its presence even more! 
this is gonna be so interesting to watch how they play out their new partnership with lvmh 
and what happens next with that hainan project 
Anyway, it makes total sense considering the whole travel situation post-Covid and people's spending habits 
. And can we talk about how CTG Duty Free is just so extra with that 79% share in China's duty-free market 
? I mean, nice move, guys! 
But seriously, it's like DFS Group needs to step up its game if they wanna stay relevant 
. And what's up with the Hainan project getting put on hold? Like, were they just pretending it was a thing all along? 
Guess you'll just have to wait and see how this all plays out! 
CTG Duty Free is definitely gaining some ground, though - 79% share of the Chinese duty-free market is no joke! 
. I mean, those markets are still pretty solid for luxury travel retail. But at the same time, it makes sense given the decline in sales and profitability. It's like DFS is acknowledging that things aren't as rosy as they thought 
? Only time will tell, but it's def an interesting development 
.
CTG Duty Free basically has free reign over those markets and I'm curious how they'll shake things up. On a more serious note, it's crazy how DFS was struggling due to reduced Chinese tourist spending post-Covid 
. But DFS Group just lost $3 billion since 2020, so I hope they can recover from this... or they'll be struggling even more 
I'm sure they'll make the most of it and use those assets to expand their presence in China. It's also a smart move by LVMH to rationalize their Selective Retailing division and maintain influence in the Chinese duty-free ecosystem without all the operational hassle.
. But one thing's for sure, it's another chapter in the ever-changing world of global travel retail 
!
. but on the bright side, ctg duty free is getting a lot of power now that they're acquiring dfs's stores 
. But now it seems like everyone wants a piece of the action in China 
. CTG Duty Free getting all these Hong Kong and Macau stores is pretty much a no-brainer, they already own 79% of the market anyway 
.
. These new-fangled travel retail deals are all well and good, but at the end of the day it's all about gettin' your products to people who want 'em