Estée Lauder travel-retail revenue declines amid dollar strength and MERS
Cosmetics-giant Estée Lauder Companies reported a decline in travel-retail sales in fiscal year 2015 (ended June 30, 2015), despite an increase in global airline traffic and expanded distribution in the channel.
The company said that a stronger dollar and the outbreak of Middle East Respiratory Syndrome (MERS), which killed nearly 40 people in South Korea this year, contributed to decline, with travel-retail sales falling by 4% in the last quarter of fiscal year 2015.
Over 55,000 tourists had cancelled trips to South Korea by the mid-June, according to the World Economic Forum.
Slower retail growth in Hong Kong and China, as well as a decline in spending by Russian and Brazilian travellers are also expected to impact sales revenue into the 2016 fiscal year.
The news came as the company also forecasted below-estimated earnings across the whole business for the coming fiscal year, and announced that net sales in the fiscal year ending in June went down to $10.78bn, a 1.7% decrease from $10.97bn the previous year. The company said it missed its 7% growth target because of accelerated sales orders in Latin America and the use of constant currencies to calculate international profits.
For the three months ended June 30, 2015, the company reported net sales of $2.52bn, compared with $2.73bn the previous year. Skincare products were chiefly affected, with overall sales falling by 16% in Q4.
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However, expanded distribution, including in travel-retail, also helped lift some labels’ revenues. While sales for heritage-brands Estée Lauder and Clinique slumped, the conglomerate’s current global-marketing focus has been on growth for youthful or luxury brands like Smashbox and Tom Ford. Along with Aveda hair-care product, these brands’ expanding travel-retail channels were reported by Estée Lauder Co. to have resulted in year-on-year revenue growth that has helped offset some of this year’s losses.
The company has said that by adjusting to factors like constant currencies and accelerated orders in the fiscal year 2014, strong underlying growth in the company becomes apparent.
President and CEO Fabrizio Freda said in the company’s report for the fiscal year 2015 (Q4 and full year): “Together with our powerful brand portfolio and financial discipline we finished our fiscal year with a strong Q4, generating 7% constant currency sales growth, after adjusting for the accelerated sales orders we reported in fiscal 2014.
He added “For the full year, our adjusted 6% local currency sales growth met our expectations, and we exceeded our earnings per share forecast …Our sales grew at a faster rate than global prestige beauty, due to the success of our multiple engines of growth. Standout performances generated double-digit sales gains in most of our makeup and luxury brands and the online, specialty-multi and freestanding store channels.
“In fiscal 2016, we expect constant currency net sales growth of 6% to 8% and double-digit earnings per share growth, after adjusting for the accelerated sales orders.”
Reuters reported on Monday that Estée Lauder Cos Inc shares fell by up to 5.3% to $82.8 per share yesterday, but the value rose to $84.48 today (still down from $90 reported at the beginning of this month). Estée Lauder is currently expanding its travel-retail offering, focusing on colourful, clean brands like Mac and Smashbox, as well as its successful London brand Jo Malone.
Travel retailer Dufry Group looks set to secure the 10-year duty-free/duty-paid contract at Minneapolis St Paul International airport (MSP), which is part of 50 new restaurant, retail and convenience and news concepts being recommended by the MSP review team.
The duty-free/duty-paid concession includes current Twin Cities News Connection locations on Concourse D, subway and world passage/duty-free in the airport mall and terminal two arcade. Dufry appears to have beaten off competition from new acquisition World Duty Free Group in securing the contract.
A request for proposals for the new concepts was issued in March covering 72,000sq ft of terminal space split among 14 batches, most of which including multiple venues and terminal locations.
A total of 54 proposals were submitted, each of which judged on its financial plan, merchandising concept and design plan, Airport Concessions Disadvantaged Business Enterprise programme participation and management and operations plan. The proposal with the most points for each batch was selected for recommendation.
The review team’s recommendations were presented to the Metropolis Airports Commission Management and Operations Committee for consideration on August 3. Findings were discussed at a meeting this week.
According to MSP, the aim of the process is to; enhance participation by regional businesses, operators and suppliers and disadvantaged business enterprises; expand the variety of products and price points available to consumers, including a broader selection of ethnic foods; attract high-impact national brands; increasing duty-free shopping opportunities; and reflect national trends toward craft beer and cocktails, unique merchandise and blended food and entertainment experiences.
remy hair extensionsMetropolis Airports Commission executive director and CEO Jeff Hammier, whose company owns and operates MSP said: “Minneapolis-St. Paul International is well known in the airport industry for its robust mix of food, retail and service amenities. As we modernise our concessions programme, we want to build on those strengths and provide even more reasons for travellers to favour MSP over other transportation options.”
Batch 101: Food and Beverage
Includes current Chili’s location in the airport mall. Requested concepts: Casual full-service craft beer bar and restaurant. Proposing entities: Aero Service Group, Inc., Delaware North-Hell’s Kitchen MSP, LLC, HBF MSP Partners JV, LLC, Host International, Inc., SSP America MSP, LLC, and TGI Friday’s, Inc. Recommended for award: Aero Service Group, Inc.
Batch 102: Food and Beverage
Includes locations of current TGIF on Concourse C, storage space on Concourse E, and Simply Books and Creative Kids in the airport mall. Requested concepts: Nationally branded sports bar and restaurant, coffee and donuts, and a quick serve restaurant. Proposing entities: Delaware North-Angel Food-Hell’s Kitchen MSP, LLC, HBF MSP Partners JV, LLC, PhaseNext Hospitality, and RB/ERJ JV, LLC. Recommended for award: PhaseNext Hospitality.
Batch 103: Food and Beverage
Includes locations of the current Travel Express and restrooms on Concourse C, Burger King, Wok “n” Roll and Caribou on Concourse E, and Gadgets to Go, Sunglass Hut and Everything ASAP in the airport mall. Requested concepts: Wine bar with limited food service, “food truck” alley, and a full-service wine bar and restaurant. Proposing entities: Midfield Concession Enterprises, Inc. and SSP America MSP, LLC. Recommended for award: Midfield Concession Enterprises, Inc.
Batch 104: Food and Beverage
Includes locations of current Quizno’s and Northern Lights on Concourse D and D’Amico’s and office space on Concourse E. Requested concepts: casual full service restaurant, bar and music venue, and a craft cocktail bar and restaurant. Proposing entities: Delaware North-Ventnor Partners MSP, LLC, HFF-Rylo MSP, LLC, Lancer Management Services, LLC, and SSP America MSP, LLC. Recommended for award: SSP America MSP, LLC.
Batch 105: Food and Beverage
Includes locations of current business center on Concourse F and Talie, ZoZo and In Motion in the airport mall. Requested concepts: 24-hour sandwich shop and a fast-casual restaurant. Proposing entities: Fast Casual Experts, Inc., HBF MSP Partners JV, LLC, JMLM, Inc., Midfield Concession Enterprises, Inc., and SSP America MSP, LLC. Recommended for award: SSP America MSP, LLC.
Batch 106: Food and Beverage
Includes current North Shore News & Gifts locations and office space, restrooms and vending on Concourse E, and Johnston and Murphy in the airport mall. Requested concepts: two coffee venues and a quick-serve restaurant. Proposing entities: Host International, Inc., Midfield Concession Enterprises, Inc., and SSP America MSP, LLC. Recommended for award: Midfield Concession Enterprises, Inc.
Batch 107: Food and Beverage
Current Caribou location on Concourse G. Requested concept: coffee. Proposing entities: Caribou MSP Airport, HBF MSP Partners JV, LLC, Host International, Inc., and PhaseNext Hospitality. Recommended for award: Caribou MSP Airport.
perruques cheveux naturelsBatch 201: Convenience and News
Locations of current Estes on Concourse A, Travel Express News (wall unit) on Concourse C, Travel Express News on Concourse D, Lakeside News Connection on Concourse F, Minnesota! and Spirit of the Red Horse in the airport mall, and Travel Express and North Shore News in terminal two. Requested concepts: convenience and news venues. Proposing entities: Airport Concessions, Inc., Delaware North-CBR MSP, LLC, Hudson Group Retail, LLC, Pacific Gateway Concessions, LLC, The Marshall Retail Group, LLC, The Paradies Shops, LLC, and World Duty Free Group North America, LLC. Recommended for award: Hudson Group Retail, LLC.
Batch 202: Convenience and News
Locations of current Authors/Red Balloon and storage space on Concourse C, Minnesota! on Concourse D, Icescapes on Concourse E, restroom on Concourse F, Brookstone and Fox News in the airport mall, and Lakeside News in the pre-security Tram Level of terminal one. Requested concepts: convenience and news venues. Proposing entities: Delaware North-CBR MSP, LLC, Hudson Group Retail, LLC, Pacific Gateway Concessions, LLC, The Marshall Retail Group, LLC, The Paradies Shops, LLC, and World Duty Free Group North America, LLC. Recommended for award: World Duty Free Group North America, LLC.
Batch 301: Duty Free/Duty Paid
Includes locations of the current Twin Cities News Connection on Concourse D, Subway and World Passage/Duty Free in the airport mall, and the arcade in terminal two. Requested concept: Venues with a mix of Duty Free and Duty Paid retail. Proposing entities: Dufry MSP Retailers JV and World Duty Free Group North America LLC. Recommended for award: Dufry MSP Retailers JV.
Batch 302: Retail
Includes locations of the current Minnesota! on Concourse C, MSP News, Creative Kids, Minnesota! and restrooms in the airport mall. Requested concepts: Bookstore, outdoor lifestyle retail, regionally themed gift shop, bookstore and children’s concept, and sunglasses. Proposing entities: Delaware North-CBR MSP, LLC, Hudson Group Retail, LLC, Paradies-MSP 2015, LLC, and World Duty Free Group North America, LLC. Recommended for award: Delaware North-CBR MSP, LLC.
Batch: 303: Retail
Includes locations of the current FOX News on Concourse C and Sports Minnesota, Body Shop, Rocky Mountain Chocolate, and Spirit of the Red Horse in the airport mall. Requested concepts: Regionally themed art gift shop, premium gift shop, candy/confections, and retail women’s intimate apparel or spa services. Proposing entities: Delaware North-CBR MSP, LLC, The Marshall Retail Group, LLC, and World Duty Free Group North America, LLC. Recommended for award:Delaware North-CBR MSP, LLC.
Batch 304: Retail
Includes current Twin City News locations on Concourse E, Simply Books and BluWire on Concourse F and Radio Road, Fly Babies and Brookstone in the airport mall. Requested concepts: unspecified retail, men’s and women’s professional apparel, and jewelry. Proposing entities: Pacific Gateway Concessions, LLC. Recommended for award:Pacific Gateway Concessions, LLC.
Batch 305: Retail
Includes locations of the current Grand Ave., Tumi, Surdyk’s, and Harley Davidson in the airport mall. Requested concepts: technology retail, active-wear apparel, specialty apparel and luggage. Proposing entities: MSP Innovations, LLC, Paradies-MSP 2015, LLC, and World Duty Free Group North America, LLC. Recommended for award: MSP Innovations, LLC.
Xi’an Xianyang International airport (XXIA) and joint-venture partner China Duty Free Group (CDFG) have opened China’s first walkthrough duty-free store in May.
Plans for an exclusive new international area in terminal three and 600sq m walkthrough duty-free store, operated by the joint-venture consisting of CDFG and majority Xi’an Xianyang International airport Co shareholder China West Airport Group, were first revealed by DFNI last September.
The pier, which has increased space for international check-in and baggage-claim facilities, also consists of duty-paid shops, which offer a mixture of local specialities and souvenirs. These are also run by the joint-venture.
Xi’an Xianyang International Airport Co COO Wolfgang Weil told DFNIonline: “The new pier, including the walkthrough opened on track. All processes including check-in and baggage claim are running smoothly”
Regarding the walkthrough, which offers traditional core categories such as liquor, tobacco and gifts, along with sunglasses and speciality products, Weil said: “I have seen many airports in China and no other walkthroughs. China Duty Free Group is the operator at all the smaller airports in China and it took a while to convince them to do something new.”
See the September edition of DFNI for more on the development at Xi’an Xianyang International airport.
Mars International Travel Retail (MITR) has expanded its global travel-retail team with the appointment of Matt Boulter as category director, responsible for the marketing and category teams. Boulter has strong cross-functional experience having held positions across several different areas including manufacturing, commercial, sales and marketing.
He joined Mars nine years ago and his most recent role as Snickers UK brand director, where he was part of the Global Snickers Brand Board, focused on key growth driving initiatives such as the global “You’re Not You When You’re Hungry” advertising campaign.
perruques cheveuxMITR general manager Craig Sargeant said: “Matt has built a tremendous track record during his time at Mars, and exudes all the defining characteristics of the culture we are proud of within the MITR business. We are extremely excited to have him, and I wish him every success.
“With a wealth of marketing experience from creative development to commercial delivery, as well as a passion for people and personal development, Matt is a great addition to the international travel-retail team.”
Boulter added: “Travel-retail provides a unique platform to bring the magic of brands to life; I am thrilled to be involved in this exciting and innovative industry.”
Another new face joining the MITR team is Arabella (Belle) Smith (pictured above) who assumes the newly created role of Corporate Affairs manager for the Mars global retail business. In her new role, Belle will be responsible for developing corporate affairs strategies and providing communications support for MITR and Mars Retail Group, including M&M’S World stores and My M&M’s.
Belle’s new role will ensure connectivity of the global retail group, which includes providing MITR and Mars Retail Group leaders with the strategic communications counsel, insights and tools to achieve key strategic goals.
Belle brings retail industry experience having joined the company in 2011 as Marketing & PR manager.
Travel retailer DFS Group has opened Hera pop-up stores at its T Galleria by DFS Hong Kong outlet earlier this month.
The retailer celebrated the opening of the Korean beauty brand pop-up stores with Hong Kong actress Charmaine Sheh and Korean movie star Park Eun Hye. They were joined by Hera head make-up artist Jinsu Lee in sharing their beauty tips with Hera fans and showing them how to achieve the signature K-beauty Seoulista look.
According to DFS, the brand, known for its cutting-edge technology, is a favourite with trend-savvy women looking to emulate the K-beauty styles seen in K-pop music and K-drama TV shows.
lace front wigsIn order to help customers achieve the desired Seoulista look, the main pop-up store at T Galleria by DFS, Hong Kong, Canton Road will offer Seoulista makeup demonstrations by Hera’s head makeup artist as well as a makeup touch-up service to customers. All four pop-up stores will offer a limited supply of product kits to customers with a minimum purchase.
A DFS statement said: “Hera chose Hong Kong, the largest cosmetics market in Asia, for its first-ever pop-up stores, partnering with DFS to create a test-bed for the global market and a bridge to other Asian countries. Featuring best-selling fan-favourites, including the Olympia Le-Tan UV Mist Cushion, UV Mist Cushion and Age Reverse Cushion, the four Hong Kong pop-up shops bring local customers and international travellers first access to the Hera brand in Asia outside Korea.”
Dubai Duty Free (DDF) won two top corporate social responsibility awards at the recent CMO 5th Asia Best Corporate Social Responsibility Awards and 1st Asia Green Future Leaders Awards held on August 12 at Pan Pacific Hotel, Singapore.
“The Best Corporate Social Responsibility Practices” was awarded to DDF for demonstrating its outstanding commitment to Health and Safety, Environment in the community and for sustaining stronger relationships with its employees, customers, suppliers and other stakeholders. “The Best Green Organisation of the Year” was also awarded to DDF for demonstrating our environmental commitment through our people, processes and facilities.
The ASIA Best CSR Practices Awards, which is composed of 31 organisational and 8 individual categories, is Asia’s highest recognition of corporate organisations that have a significant and positive impact on the lives of people around them while the ASIA Green Future Leaders Awards recognises those leaders who have made a sustainable contribution in every sphere, like renewable energy, waste management and recycling to create a better world.
The awards were judged by 10 top executives from various leading companies and academes in Asia, each with vast experience in the field of Corporate Responsibility.
Dubai Duty Free executive vice-chairman Colm McLoughlin commented: “These awards are a true reflection of our commitment to Corporate Social Responsibility. We have made a pledge to embed these principles and have a dedicated Corporate Responsibility department that is very active in driving forward new initiatives. Corporate Social Responsibility is linked to our Company’s core values and is the foundation upon which we measure our success. “
Dufry Group has notified it has carried out its mandatory tender offer for the purchase of World Duty Free shares on August 18, 2015.
Dufry purchased 1,102,257 at a price per share of €10.21.
Dufry officially closed the acquisition of the 50.1% stake of World Duty Free Group from Edizione for €1.31bn ($1.43bn) on Friday August 7 2015, enhancing its leading position in the industry, CEO Julían Díaz said in a statement.
The combination with WDFG will further enhance Dufry’s global position in the travel-retail industry with a market share of around 24% in airport retail globally. The combined entity will comprise a geographically diversified concession portfolio with operations in 62 countries and close to 400 locations, providing a balanced exposure to developed and emerging markets and spanning across all five continents.