30 AUGUST 2018

The Moodie Davitt Stock Watch serves as an indicator of overall business confidence in the global travel retail & duty free industry. Share prices of major publicly listed companies that own travel retail operations are monitored on a weekly and year-to-date basis to offer an indication of business confidence in the sector.

Shares in two of the travel retail-related companies we monitor have fallen by double-digits since our last Stock Watch column just over a month ago.

China Duty Free Group (CDFG) parent China International Travel Service saw its share price drop -11.3% between closing on 18 July and 28 August, the period covered here. But that performance needs to be put in context – the company hit a 52-week high on 18 July and has been our top performer so far this year by some distance. Its year-to-date differential is now +47.5%.

Shares in Egypt Free Shops Company were down -14.9% in the current period, but remain +13.5% up since 1 January.

Dufry, the largest travel retailer in the world, has not had a stellar year on the stock market so far. Shares in the company fell -7.2% in the period tracked, and are down -17% since the start of 2018. That’s despite announcing an all-time high first half EBITDA of CHF464.1 million (US$466.23 million) on 3 August, a +12.9% rise year-on-year.

The company described its results for the period as “solid” after recording a +7.2% increase in turnover to CHF4,097.1 million (US$4.1 billion). Organic turnover growth was +5.5%.

Reacting to the results, analyst Bank of America Merrill Lynch said it believed Dufry was facing “significant long term headwinds” – namely increasing concession fees and the increased online threat. Such sentiment, shared by some but far from all Dufry watchers in the investment community, has dragged the company's share performance despite consistently strong financial performances.

Dufry subsidiary Hudson – which has faced a rocky start since launching trading on the New York Stock Exchange in February – was our top performer in the current period. Shares in the company rose +11.3%, reaching a high of US$19.77 in the period.

Among the food & beverage companies we track, shares in Elior Group were up +8.4%, but Autogrill saw a -7.9% decline.

A strong performance in the airport channel drove +5.2% year-on-year consolidated revenue growth at Autogrill in the first half of 2018, to €2.1 billion. Like-for-like revenue growth was +3.9%. Underlying EBITDA was down -1.3% though, to €139.5 million. Autogrill said margins were impacted by cost pressures in North America and the investment in ongoing projects designed to improve the company’s operating model. The benefits of these projects are expected to be seen from the second half of 2018, it said.

The Moodie Davitt e-Zine | Issue 245 | 30 August 2018