EUR 850.00 For Business Accounts Only

Morningstar | As the Most Scaled Travel Retail Operator, Dufry Is Well Positioned for Market Share Gains

As a leading player in travel retail and a leading concession operator in airport retail with over 20% market share, more than double that of its next biggest peer, Dufry is well positioned to benefit from increasing global travel flows. Over the years, Dufry has played the role of consolidator in a globally fragmented industry, allowing it to achieve purchasing scale, breadth of store formats and product offer, and geographical diversification.We contend airports capture the bulk of value in airport retail through concession fees of about 25%-30%, owing to ownership of unique real estate assets. Nonetheless, we believe that Dufry, as the most efficient retail operator in about 300 airports globally, benefits from a purchasing scale that hardly any competitor or airport can match as a standalone entity (the global airport industry is fragmented and 70% publicly controlled, hindering consolidation). Dufry should thus be well positioned to withstand concession inflation pressure and consolidate the industry as weaker operators exit the market, which should increase its bargaining power in the long term. Dufry also provides value for suppliers (many of them fast-moving consumer goods companies and luxury brands) by giving exposure to an attractive high-growth distribution channel with brand-building opportunities to an affluent, captive audience.We believe Dufry should be able to expand by about 4% annually over the 10-year forecast period through a mix of organic growth (driven by increasing passenger numbers) and new concessions (gained organically or through consolidation). We expect operating margins to be broadly stable, with gross margin efficiencies and scale offset by airport concession inflation (both effects moderating over time).