Gebr Heinemann in 2020 and 2021: A snapshot of performance
Hamburg-based travel retailer and distributor Gebr Heinemann revealed a -67% fall in 2020 turnover year-on-year to €1.6 billion. Retail turnover fell by -68% to €1.2 billion, with the distribution business down by -57% to €400 million. With a 63% share of turnover, business at airports was the largest segment by channel. This was followed by the border channel at 21% (which climbed from 12% in 2019 as that channel recovered faster than others). By category, liquor, tobacco and confectionery accounted for 55% of group sales, followed by perfumes & cosmetics with 33% and fashion & accessories with 9%. Europe remained the largest region by sales at around 80%, followed by Asia Pacific (10%), Middle East (5%), Africa (4%) and the Americas (1%). For the first time in its over 142-year history, Gebr Heinemann noted that it was forced to make “severe cutbacks” in all areas in 2020, cutting costs while maintaining liquidity. After the global closure of nearly all retail sites and the standstill of the distribution business, all sources of income “almost completely dried up”. The retailer explained that this meant streamlining the product range, negotiations on conditions with landlords and suppliers, and personnel measures. Worldwide, the company was forced to let go of around one-third of its employees – which it described as “a stab in the heart for the family business”. Chief Financial Officer Stephan Ernst said: “Despite suffering very great losses, we are financially well equipped. We have managed well and have always acted with sufficient care regarding new projects and investments in the past. In addition, we concluded a syndicated loan agreement with our five principal banks in January 2020 just before the onset of the crisis. This provides us with financial security in the long term, while giving the company room to manoeuvre. Our objective is to continue enjoying the high privilege of financial independence and to remain in control of our company’s future.”
* Group turnover of Gebr. Heinemann and its affiliates. Consolidated Gebr. Heinemann turnover according to German Commerical Code (HGB): € 1.2 billion
Source: Gebr Heinemann Annual Business & Corporate Responsibility Report 2020
Last year Heinemann reported a +12% increase in turnover in January and February, before the pandemic hit, but management noted that the impact came across all territories and channels. Chief Operating Officer Raoul Spanger said: “The 2020 business year was yet further affirmation that we are better off using different channels to balance risks more effectively. As a globally operational business, the pandemic has hit us hard everywhere. But it is this broad regional footprint in almost every form of travel – be it air, sea or land – that is now helping us reboot our global business.” The company is now expecting a gradual pick-up in travel with the 2021 Summer flight schedule, with further progress in 2022. This will be aided by progress in vaccinations and the introduction of ‘travel bubbles’. Depending on travel restrictions and developments pertaining to the pandemic, some airport shops have already partially or temporarily reopened. Some airports where Gebr. Heinemann is operating are currently only open for local travel. Less affected than those in northern or western Europe, it said, were airports in Moscow, Istanbul and Kiev. Walk-through shops were also allowed to open in some cases to better control and distribute passenger flows, for example in Frankfurt. Despite fewer travellers and a lack of high-spending shoppers, notably from Asia, there were some encouraging signs, said the company, with average spends rising by +20% to +50% depending on the location, as pent-up demand drove sales higher. Other positives included the opening of the new Berlin Brandenburg Airport and an extension of its contract at Vilnius Airport by a further two years from October 2020.
Raoul Spanger: Sales have reached around one-third of 2019 levels to date in 2021, with a target of hitting 50%
Beyond this, the company’s ambitions to grow in Asia received a boost with the award of 780sq m of retail space at the Lisboeta Hotel in Macau. Raoul Spanger said: “This is our first step into downtown duty free in Macau, with a store that we operate on our own. We aimed to open this store in 2020, so it will be a year later. It will mainly be a P&C offer and we expect to do US$8-10 million a year. It’s a careful step, a pilot, and we look forward to the experience.” On the Hainan Island opportunity in China, Max Heinemann said that the company had been watching this for a long time. “We didn’t run a blind eye to Hainan. At Heinemann Asia Pacific we were among the early movers to investigate this story. We have been here and there in discussions but we are also selective on what opportunities we take at this point. We don’t see that opportunity vanishing. Hainan is a business model in itself, not only another location. We are close to that market. It’s not that we missed the train, it’s a careful choice about what role we play and how we partner. We will look at how that opportunity looks for the future.” For the year ahead as a whole, the company had originally budgeted for sales at 50% of 2019 levels, but continued lockdowns have hindered progress.
Meet the media: At the annual press conference were (left to right): CEO Max Heinemann, Chief Commercial Officer Dirk Schneider, Chief Operating Officer Raoul Spanger, Co-Owner Claus Heinemann and Director Corporate Affairs & Compliance Jennifer Cords
Raoul Spanger said: “In Q1 and Q2 it is more like one-third of 2019 sales. That means our turnover goal for the year is under pressure. “Nevertheless, in the last four weeks, we have had more positives than negatives. Vaccination is going ahead in Europe, and we have more positive news about traffic picking up slightly here and there. For quarter three and four, we are optimistic, but what will happen long term is an endless discussion. We are expecting a more long-term recovery. We think it will be a good business in quarter three and four. We keep our goal of 50% turnover of 2019 but the full recovery will only happen in 2023.”
The Moodie Davitt eZine Issue 297 | 21 June 2021
The Moodie Davitt eZine is published 15 times per year by The Moodie Davitt Report (Moodie International Ltd). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit www.moodiedavittreport.com and to subscribe, please e-mail firstname.lastname@example.org