Recovery Started and New Organization Implemented

During the summer months we have seen the recovery of our business starting with governments lifting travel restrictions, flights resuming and our shops reopening in all divisions. Even though uncertainty remains and we currently receive daily alternating information on the development of the crisis, it is important to maintain the positive approach we have taken when reopening our shops. Currently we have over 1,200 shops serving our customers, which represent a sales capacity of close to 70% of the Group. Shop openings are ongoing and well aligned with our shop-opening plan. The challenges our teams had to overcome in developing and permanently adapting the shop reopening plan are well described in the interview with Fernando Nadal, our Global Retail Operations Director.

In recent weeks, passengers have shown that their willingness to travel remains and that they also like to visit our shops. The comprehensive health and safety initiatives implemented reassure customers they are in a safe environment, so that they can enjoy attractive shopping experiences and benefit from our comprehensive product assortments and promotions. These behaviors are encouraging signs going forward, even if overall sales volumes are still low as compared to a normal environment.

For us this means, that we have to maintain our high level of readiness to serve customers at any moment, as soon as we have the opportunity to do so. In this context, the implementation of the new company organization and structure plays a key role. It takes into account the changed market environment and the size of the company, with adapted processes and procedures.

The new organization is now implemented

At the beginning of September, the new organization announced earlier in June this year, has become effective. Its main goal is to take out complexity and add the flexibility mentioned above, which allows us to react fast to the changing requirements. This is particularly true during the current recovery phase. The environment and the operating conditions will continue to be very dynamic, showing different developments happening in different locations at the same time. Therefore, the agility provided by the leaner organization is key to adapt quickly and drive sales as much as possible in every single shop, by better responding to the local needs of our operations.

In the context of the new structure and organization we have also announced our plan to acquire the outstanding shares of Hudson, to delist the company from the New York Stock Exchange and to fully reintegrate our North American business into our organization. This process is currently ongoing and we expect to close this transaction in the fourth quarter. From an operational perspective, the reintegration of Hudson will further contribute to reduce complexity within the Group organization, as well as increase efficiency and profitability by eliminating the costs related to the separate listing. Obviously, we will continue to act as the Traveler´s Best Friend and to enhance their travel experience in North America. Our strategy focusing on both duty-paid and duty-free shops as well as airport food & beverage will remain unchanged and we want to continue expanding our activities in all of these channels.

Moving on as a strong team

During the first semester and particularly during the past months we have gone through challenging times, in which we also had to take difficult decisions to protect the resilience of the company. I am firmly convinced that we have taken the right measures and initiatives to tackle the future with confidence and a positive spirit. I also want to reassure you, that Dufry – and the travel retail industry – is a resilient business, which we can further grow going forward. Therefore, it is important, that we move on as strong team and with the focused motivation, I have seen in the recent weeks. I thank you for this extraordinary dedication and support for the company.

Kind regards,
Julián Díaz
Chief Executive Officer