Retail Business Indicator

Transcription

1 ANALYSIS Retail Business Indicator October 2004 The Moodie Report Retail Business Indicator Every issue The Moodie Report canvasses a snapshot of travel retailers to assess sales performance on a year-on-year comparative basis. In early October we spoke to a number of leading retailers from around the globe to see how sales had fared for the year to date. The results generally make encouraging reading. Retailer: Abu Dhabi Duty Free Location: Abu Dhabi, UAE Period: To 30 September Key numbers: Total sales (excluding the popular raffle draw which boosts revenue and spend per head considerably) rose +19.8% year-on-year. Spend per head increased +4.5% for the period to US$ Details: The key beauty & cosmetics sector rose +19.3% and destination/souvenirs from a smaller base increased +66.9%. For full product performance see the Abu Dhabi Duty Free feature on page 187 of this issue of The Moodie Report. Main drivers: An unrelenting focus on driving footfall and increasing conversion and average spend, allied to rocketing traffic the impact of new airline Etihad. On the record: Managing Director Mohamed Mounib: It s particularly satisfying that we are continuing to deliver month-on-month and year-on-year growth across our core benchmarks. Retailer: Aelia Location: France Period: To late September Key numbers: Airport sales are growing again (roughly +5% year-to-date over last year), despite heavy drops in duty paid tobacco following significant increases in French tobacco taxes over the past 12 months. Details: Fine foods/confectionery and fragrances & cosmetics are the fastest-growing categories. The key challenge is that sales are not growing in line with traffic (+8% year to date); in other words there is a penetration and spend per head issue. Nonetheless the retailer remains confident for the future. Main drivers: Heavy investment in the first few months of 2004, focusing on existing store renovation, in particular in Paris Charles de Gaulle terminal 2F, where five shops were revamped. Improvements to CDG D (Virgin) and CDG B (liquor, tobacco and fine food) have also driven growth. On the record: Business Development Director Ambroise Fondeur: In line with the issues facing domestic retailing, price or to be more precise, travellers perception of price is becoming more and more of an issue. We have started changing our communication by focusing more on price and good-value items. We think this trend is here to stay, which forces us to reposition our product offer and communication strategy. This will definitely be one of our priorities in the months ahead. The other priority for Aelia has been the adaptation of the retail offer following the closure of CDG 2E. As traffic has been redirected to the other terminals we have changed our offer accordingly, and re-allocated our staff. Retailer: Aldeasa Location: Spanish and various overseas airports Period: First half to 30 June Key numbers: Aldeasa posted a strong +21.1% year-onyear rise in net profit to 12.4 million (US$14.9 million) in the first half-year to June from a year earlier, ahead of forecasts of around 12 million/us$14.5 million. Aldeasa said EBITDA rose +10.7% to 27.8 million (US$33.4 million), also above forecast. EBIT rose +17.4% to 20.3 million (US$24.5 million). First-half improvement was driven by better margins and cost control. Operating costs rose just +3.5% compared with a +5.7% increase in revenues to million (US$344 million). 22 The Moodie Report

2 CONTACT: THOMAS SABO GMBH & CO. KG ESCHENAUER STRASSE LAUF/PEGNITZ GERMANY PHONE +49 (0) INFO@THOMASSABO.COM

3 ANALYSIS Retail Business Indicator October 2004 Share by business channel; sales change vs 2003: Spanish airports, Travel Value & duty free: 62.4%; +6.2% Spanish airports, duty paid: 14.9%; -2.5% Airports in other countries: 13.6%; +20.9% Museums & Palaces: 4.3%; +3.2% Other income: 3.8%; -2.7% Other businesses: 1.1%; -16.2% Total: 100%; +5.7% Details: The group expressed pleasure at the performance of its international operations, which saw sales climb +20.9% in the first half but disregarding the impact of the US Dollar s depreciation against the Euro, this figure would have risen to +33.1%. Aldeasa s increase in international (outside Spain) duty free sales per sq m (+18.1%) year-on-year (see table below) was particularly impressive. By product category, the sales growth in confectionery and foodstuffs was outstanding, said Aldeasa. The gross margin on overall retail activities increased +0.07% to 47.4%. Main drivers: Traffic and spend (v 2003) International Passengers (Spain): +10% International Passengers (other): +12.9% Passengers (Spain): -0.7% International Passengers (Spain) Spend per pax*: -3.4% International Passengers (other) Spend per pax**: +7.1% Passengers (Spain) Spend per pax***: -1.8% International Passengers (Spain) Sales area: +5.6% International Passengers (other) Sales area: +2.4% Passengers (Spain) Sales area: -5.1% International Passengers (Spain) Sales per sq m*: +0.6% International Passengers (other) Sales per sq m**: +18.1% Passengers (Spain) Sales per sq m***: +2.7% *Travel Value & duty free; **duty free; ***duty paid On the record: Company spokesman: Practically all the product families showed gross margin growth with the changes introduced in the product mix this half year bolstering this positive performance. Retailer: Aldeasa Jordan Location: Amman, Aqaba and Marka airports, Jordan Period: First half ended 30 June Key numbers: Sales soared by +59.5% year-on-year and +50.1% over the more normal 2002 period. Details: In June the retailer achieved record monthly sales, something that was not expected until the peak month of August. During the first half, the perfumery generated a +61% year-on-year increase in sales; liquor and food rose +70%; and tobacco +54%; the Books department rose +160%; and there were strong increases for the drugstore and Dead Sea items (+141%); decorations (+103%); toys (+96%) and electronics (+90%). Main drivers: A big contributor has been the new perfumery opened in late May at Amman Queen Alia International Airport. Sales have been spurred by a strong performance from the arrivals shops following a refurbishment in September 2003, doubling sales year-onyear in that sector. A number of new brands are performing strongly, highlighted by successful reintroduction of brands from the Estée Lauder Companies. On the record: Chief Operating Officer Pedro Castro: It has been the most successful semester in Aldeasa Jordan's history. Retailer: Alpha Retail (Alpha Airports Group) Location: UK, International (various) Period: First half ended 31 July Key numbers: Total retail sales increased +11.3% to million (US$189.3 million), with UK retail sales up +8.0% to 85.1 million (US$152.8 million) and international retail sales up +27.7% to 20.3 million (US$36.4 million). Inflight retail sales continued to grow strongly, up +21.4% to 41.9 million (US$75.2 million). Details: Total retail profit improved +61.1% to 5.8 million (US$10.4 million) achieving an overall 5.5% profit margin (compared to 3.8% for 2003/4). Main drivers: UK retail benefited from a +7.3% growth in passengers through UK regional airports, and enjoyed a +1.0% growth in spend per passenger, despite the EU expansion from 1 May and the ensuing loss of duty free liquor and tobacco sales to passengers travelling to the new EU countries. The company benefited from a +23% growth in total passengers to and from Sri Lanka, and a +31.3% growth in international passengers to Orlando, with enhanced sales per passenger achieved in both markets. On the record: Executive Director David King: We're really pleased with the retail business. We've got good passenger growth but the underlying issue is that we're growing penetration and growing spend and that turns the additional passengers into profitability. 24 The Moodie Report

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7 ANALYSIS Retail Business Indicator October 2004 Retailer: Bahrain Duty Free Location: Bahrain Period: To 31 August Key numbers: The year got off to a great start; for the eight months ended 31 August total sales were up +39% over the same period the previous year, outstripping a passenger rise of +21%. Departures sales increased +35% year-on-year for the period, while arrivals shops have rocketed by +80%, boosted by the impressive new store opening in November Details: Perfumes and cosmetics are the retailer s number one category, representing 19% of all sales. The department is up by +48% over last year, with Estée Lauder Companies brands showing especially outstanding growth. The top five fragrance houses with year-onyear growth are Chanel +16%, Christian Dior +40%, Estée Lauder +54%, Givenchy +18% and Lancaster Group +44%. Liquor was up by +29% for the period, driven mainly by Scotch whisky, with increases of +31%, +31% and +32% respectively in the standard, premium and malt sectors. Tobacco products were up by +26% with outstanding performances from UK brands (+17%) and Cuban cigars (+31%). Confectionery/foodstuffs another consistently outstanding performer for Bahrain Duty Free rose +21%, with an excellent showing from top house Masterfoods which grew +33% year-on-year, ahead of number two brand Nestlé (+12%). Other strong increases came from powdered drink Tang (+10%), local speciality Al Rafai Nuts (+72%), Kraft Foods (+27%), Lindt (+14%) and Cadbury (+10%). The stalwart gold category put on +35%, and toys increased by +77%. But the biggest year-on-year increase was the communications/mobile phones sector, which increased by a phenomenal +105%. Key new launches include the LG brand, Siemens 3G phone, and new Samsung models. Main drivers: Primarily an increase in passengers and a new arrivals shop. With regard to category, relocating toys at the front of the shop in October 2003 has paid dividends in the form of incremental business in all the new lines listed. Toy gadgets in particular have performed well, as have licensed products such as Spiderman, WWF, Disney and Bratz. On the record: General Manager Maurice Burke: The arrivals shop which was opened in November 2003 has provided good month-on-month growth. Penetration has grown by +41% as against an arrivals pax number increase of +18%. Retailer: Brightstar Business Corporation Location: Aeropuerto Asunción, Paraguay Period: First half to 30 June Key numbers: Overall sales rose +38.7% year-on-year, outstripping a passenger increase of +22%. Average spend increased +7%. Details: Tobacco has been the bright star for Brightstar. For the first half the category represented 14.9% of sales compared with just 7.4% in A Gauloises promotion, for example, led to a +300% lift in sales for the January March period. Main drivers: Improved traffic levels have helped, but spend has raced ahead thanks to an improved offer and understanding of the travelling consumer. On the record: General Manager Nicolas Urioste: July was the best year for Brightstar since we started in 2001, and to our surprise August was even better. If we can keep up the good work we should be up +60% this year. Retailer: Dubai Duty Free Location: Dubai, UAE Period: To 30 September Key numbers: Another inspiring performance as nine months sales show a +36% rise over the same period last year, with individual categories posting increases in excess of 50%. Total sales reached AED1.26 billion (US$350 million) a figure which puts the operation well on track for record year-end results. Third quarter sales for the period ended September rose by +23% year-on-year. Details: Strong category growth can be seen across most sectors. Gold sales, which currently account for 11% of total sales, have increased by an impressive +40%. Fragrances, which generate 12% of sales, rose by +41% in the first nine months of the year, while cosmetics sales rocketed by +70%. Sunglasses grew +50%, and cameras/accessories by +64%. Main drivers: A number of factors, including the opening of new shops which have dramatically improved the central retail area in Sheikh Rashid Terminal. In the past year alone these have included a new Gold Shop, a new Watch Shop and the Gifts from Dubai Shop. 28 The Moodie Report

8 2004 EA Fragrances, Co. Britney Spears is a trademark licensed to Elizabeth Arden, Inc. by Britney Brands, Inc. Do you dare?

9 ANALYSIS Retail Business Indicator October 2004 On the record: President of Dubai s Department of Civil Aviation, H.H. Sheikh Ahmed bin Saeed Al Maktoum: Sales at Dubai Duty Free have consistently grown throughout the year and annual sales are expected to reach US$500 million, which represents an increase of +30% over last year. Dubai Duty Free Managing Director Colm McLoughlin: We will continue to review the retail offer and new plans include the introduction of a new Fashion Area in Sheikh Rashid Terminal and the expansion of the Arrivals Duty Free in Terminal 1. Retailer: Eraman Location: Kuala Lumpur, Malaysia Period: To 30 September, plus year-end projections Details: Sales are expected to grow more than +10% year-on-year based on the current performance. Key product sectors have grown from +12% to over +35%. Particularly strong are liquor and cigarettes & other tobacco items which have both increased by over +30% for the year to date, while chocolates and perfumes & cosmetics all increased between +12% and +25% Main drivers: Traffic is rising strongly compared with A forecast +5.7% increase to 18.5 million this year seems set to be easily surpassed, according to CEO Tuan Syed Ahmad Syed Salim. On the record: Tuan Syed Ahmad Syed Salim: Things are looking pretty bright at our end. We are on track for another successful year for Barring any unforeseen circumstances, we will register a double-digit increase. Retailer: InterBaires Location: Argentina (mainly Ezeiza Airport, Buenos Aires) Period: To 31 July Key numbers: InterBaires generated a +37.9% year-onyear increase in duty free spend per passenger for the seven months ended July and a +13.6% increase in the average price per transaction. The figures cover all the retailer s airport operations in Argentina, dominated by key location Ezeiza Airport. Details: Sales were up year-on-year by +68% for the period with penetration (defined here as those passengers who buy) rising from 14.19% last year to 17.24% this year. Average spend per passenger has risen to US$11.77, up from just US$8.53 last year. The average ticket price stands at US$68.28, up +13.6% from US$60.13 last year. Brazilians and Chileans have been the key foreign spenders this year, representing 23.1% and 21.2% of international sales respectively. Main drivers: Intensive promotional activity and revamped shops including the spectacular new walkthrough Shop 2 store in Ezeiza Airport Terminal A have driven a sharp growth in sales and spend per head. This has outstripped the increase in passengers, which stood at +18.9% year-on-year for the period to 3.4 million. The improving Argentinean economy has proved a big boost. Locals are spending more, with their spend per passenger up by +35.8% for the year to date. The international spend per passenger has also risen impressively, up by +39.3% over the same period in On the record: CEO Enrique Urioste: 100% of the passenger flow coming into terminal A comes through here [in front of Shop 2] and the first thing they do is face the shop. STOP PRESS: September sales Sales vs original budget: +2.1% Sales vs September 2003: +36.9% Pax vs budget: +0.8% Pax vs September 2003: +10.4% Penetration vs budget: +3.1% Penetration vs September 2003: +19.3% Spend per pax vs budget: +3.03% Spend per pax vs September 2003: +27.6% Sales for January September Sales vs original budget: +1.02% Sales vs 2003: +55.9% Pax vs budget: +1.4% Pax vs 2003: +16.6% Penetration vs budget: +3.1% Penetration vs 2003: +21.7% Spend per pax vs budget: +3.16% Spend per pax vs 2003: +35.3% Retailer: Kuwait Duty Free Location: Kuwait Period: First half to 30 June, plus July Key numbers: The retailer registered a +29% sales increase in the first half, and is on target to reach an alltime annual sales record of US$34 million in Following the strong first half, July sales rose by +26% year-on-year to over US$3 million. Details: Hot promotional points have led to huge spikes in sales. For example, Marlboro first-half sales 30 The Moodie Report

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13 ANALYSIS Retail Business Indicator October 2004 STOP PRESS: Kuwait Duty Free September sales Strong first half momentum has continued at Kuwait Duty Free. To the end of September sales were up +18% on 2003 and +21% up on To the end of August traffic was ahead by +23% over 2003, a figure that does not take into account the high amount of low or non-spending military personnel (possibly as high as 8 to 10% of the total). Category performance for the year to 30 September Department % change Factors affecting performance Fragrances/cosmetics +28% The Hot Promotional Points have helped significantly to promote the new launches as well as promotional free gifts that are available. Kuwait Duty Free has has worked closely with suppliers and increased its complement of BAs threefold. Givenchy is up +21%, Dior +22%, Kenzo +216%, Balmain+289%, Hugo Boss+120% Electronics +26% Mobiles and digital cameras have dominated the sales this year with the best-seller being the Nokia 6600; Sony is +45% over Costumejewellery +23% Swarovski sales have risen +127% over 2003 due to increased floor space and being located at the Hot Promotional Point (at the entrance). Gold +21% Mainly 22kt from transit pax plus the gold price has increased Foods +19% Multi-purchase packs at the promotional point highlighting the best sellers. Nestlé has risen +42%. China and glass +17% Swarovski has grown by +21% due to increased floor space and being located at the Hot Promotional Point (at the entrance). Watches +15% The layout was split with high branded watches grouped together and the mass market brands grouped together to help passengers choose easily. Also the introduction of some new brands has helped to lift the retail offer. Luggage +12% The retailer has introduced Tumi leather and Elle to the range; also Go Travel is 1performing well with a +28% increase on Cigarettes & cigars +11% A promotional area was introduced for 1,000 s packs resulting in sharp rises for some references such as B&H (over +300%). Marlboro sales are up by +35%. Toiletries & misc. +11% The range was rationalised to have larger sizes and multi packs. These are strategically placed next to the best sellers at the entrance. Fashion +3% N/S Toys +3% N/S Pens & Lighters 0% N/S Music -9% N/S Books & Reading -21% N/S Souvenirs -31% N/S Total +18% Notes: Penetration was down % due to the preponderance of military traffic. Spend per head was just under 2003( -0.43%). Average spend was up by +13.5%. Source: Kuwait Duty Free; The Moodie Report were up by +35% for the first half, the latest DVD releases rose by +45%, and fragrance sales also rose sharply. Main drivers: Key to the success has been the addition of a number of specialised product areas to encourage greater dwell time in the stores, namely the latest fragrance launch area. Improved merchandising linked to specific merchandising plans agreed with each supplier are boosting sales. Promoters working with individual houses/brands are boosting business considerably for example a promoter for Masterfoods products helped drive up sales for the confectionery house by +18% in the first half and by +21% in July. Givenchy grew by +60% in the first half for similar reasons. On the record: Anthony Chalhoub, Managing Director of parent company Habchi & Chalhoub: Our space is compact but our thinking is big. Travel retailing is not just a business that succeeds because we have a supposedly captive audience. We have to make it happen by encouraging passengers into the stores and then ensuring we convert more browsers to shoppers. Retailer: Muscat Duty Free (Oman Sales & Services) Location: Muscat, Oman Period: To 31 August Key numbers: Muscat Duty Free, the trading name of the Oman Sales & Services partnership, posted an impressive 34 The Moodie Report

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15 ANALYSIS Retail Business Indicator October 2004 Oman Sales & Services product category growth: 2004 vs 2003 (year to 31 August) Product category Increase Share Tobacco +44.0% 14.1% Liquor +43.1% 26.6% Perfumes, cosmetics & skincare % 14.0% Toiletries +86.8% 4.3% Confectionery & food +19.1% 28.8% Communication % 2.2% Electronics +37.7% 2.6% Watches & clocks % 2.7% Jewellery +64.0% 0.5% Fashion & accessories +75.4% 0.8% Toys +46.7% 0.8% Ornaments & souvenirs % 0.5% Travel ware +56.2% 0.6% Music % 1.1% Writing instruments % 0.24% Total +43.4% 100.0% Source: The Moodie Report +43.3% year-on-year rise in sales for the eight-month period ended 31 August. Departures sales were up +41.7% over last year for the period, and arrivals sales climbed a startling +67.3%. Details: The retailer s leading category is confectionery and foodstuffs, which accounts for 28.8% of sales. Sales rose +19.1% for the period. Then follows liquor (a 26.6%) share, which increased +43.1%. Third category tobacco improved +44.0% year-on-year, and accounts for a 14.1% share ahead of the 13.9% held by perfumes and cosmetics. The latter grew % for the period over the same months last year. Main drivers: Both departures and arrivals traded well, with the rate of increase in sales outpacing passenger growth. The number of departing passengers for the first eight months was +28.3% ahead of last year whereas sales increased at +41.7%, thus increasing the average spend per head. Similarly, arrivals traded well with a +67.3% increase in sales versus a +15.3% increase in the number of arriving passengers during the same period. Transfer passengers rose +49.7% for the period. On the record: General Manager Steve O Connor: Both departures and arrivals traded well with the rate of increase in sales surpassing the rate of increase in the number of passengers. Oman Sales & Services key performance indicators YTD 2004 vs 2003 Passenger growth Sales growth Spend per head Penetration Ratio Growth 28.3% 15.3% 12.8% 10.8% Departures 41.7% 44.5% Arrivals 53.6% 67.3% Muscat Duty Free Operating performance for the eight months ended 31 August 2004 Retailer: The Nuance Group Location: Worldwide Period: First half to 30 June Key numbers: Sales rose +11% year-on-year (+17% likefor-like) to SFr825 million (US$528 million at the time of the announcement) for the first half. EBITDA rose +17% to SFr9.1 million (US$7.1 million). The company does not publish profitability but 50% owner Stefanel said it recorded an operating loss of million on airport retailing for the first half (compared to million for the same period last year). The pre-tax result on airport retailing showed a deficit of million, compared to million last time. However, it should be noted that Nuance incurred significant extraordinary costs associated with the merger of its Europe North and Europe South divisions. Details: Sales are headed in the right direction after the SARS-related woes of 2003 in key locations such as Toronto, Hong Kong and Singapore but spending levels are the big worry (see main drivers ). Main drivers: Spend per head is the critical issue facing the company, not just in sales terms but also profitability as so many of Nuance s contracts are now passenger-linked. If passenger numbers rise and spend falls, the impact can be grave. Effectively the retailer ends up paying more while earning less. That phenomenon is clear in the Stefanel numbers. Nuance knows it has to stop the bleeding from the worst of its airport contracts and President and CEO Roberto Graziani is doing just that (see cover story). More positively the company is focusing on introducing global best buying practice and optimising its product mix and placement. And as always, it is investing in stores and 36 The Moodie Report

16 GREAT PARTNERSHIPS MAKE GREAT RETAILING In a world as demanding as travel retailing how do great brands gain the best possible access to one of the world s most sought after markets - the international traveller? The answer is they work in partnership with retailers dedicated to the world of travel retail; retailers prepared to invest in prestige shopping environments and innovative merchandising, supported by in-depth customer knowledge, high impact promotions and world-class customer service. At World Duty Free these are the skills and resources that we bring to the partnership approach that we have with our supplier community. Our mutually supportive collaboration is the key to maximising sales, identifying new initiatives and creating a world-class retail experience to support and enhance the status of our suppliers brands. Today, over 133 million passengers annually, can enjoy this experience in over 160,000 sq.ft of World Duty Free retail space in BAA s seven UK airports. Working in Partnership Heathrow - London Gatwick - London Stansted - Southampton - Glasgow - Edinburgh - Aberdeen

17 ANALYSIS Retail Business Indicator October 2004 AFCOV sales index: First half 2004 vs % 100 % 90% 80% 70% 60% Jan Feb Mar Apr May Jun Liquor, tobacco, beauty Other products 2003 benchmark AFCOV sales per passenger index: First half 2004 vs % % % % % % Jan Feb Mar Apr May Jun Liquor, tobacco, beauty Other products benchmark AFCOV (Association Française du Commerce du Voyageur) recently released this year's second edition of the association's landmark Index, designed to measure sales patterns across the key travel retail locations in France's Espace Voyageur network. The study is being published on a quarterly basis in 2004 with the third one due out soon. The secondquarter results indicate that sales were again weak for the core liquor, tobacco and fragrance categories, in comparison with the same period in 2003 (sales are compared in terms of last year's 100 index base). Turnover declined %, % and -9.36% for April, May and June, respectively. 'Other categories' - which includes gifts, fashion, jewellery and electronics - fared even worse in April and May, before rallying notably in June. The comparisons in this instance were %, % and +6.87%, respectively. AFCOV noted that this performance - attributed to an increase in traffic and passenger spend - was all the more commendable given the difficult year these product sectors suffered in The figures for sales per passenger in the second quarter were also disappointing for liquor, tobacco and perfumery, showing a decrease of % in April, % in May and % in June. Other categories declined % in April and % in May, before edging ahead +0.24% over June last year. Look out for the third-quarter results on innovation, highlighted by its hugely impressive new stores in the Zürich Airside Centre. On the record: Roberto Graziani: I cannot afford to stay in businesses that are unprofitable by definition. Retailer: Nuance-Watson (HK) Location: Hong Kong International Airport (HKIA) Period: To 30 September Key numbers: Sales to the end of September were up +59% on the SARS-devastated Nuance-Watson s main drivers: Traffic for the year to date is up by +42.0%; Departing residents for the period rose +26.1% while departing visitors increased +37.8%. Compared to 2002, a much more stable and reliable base, departing residents rose +9.6% and departing visitors fell -8.3% Total passengers were up +4.5%. All numbers from Hong Kong Immigration. Details: The percentage changes are compared with 2002 rather than the inappropriate 2003 but have to be judged in context, says Nuance-Watson (HK) Managing Director Alessandra Piovesana as the 2004 HKIA retail landscape has changed entirely doubling the space and being totally reconfigured. She adds: Classic fashion ready-to-wear doubled its turnover. Electronics and perfumes & cosmetics grew two digits on the very high side, well above our +25% historical record. Watches, jewellery and contemporary fashion (including ready-to-wear and leathergoods) grew about +20%. 38 The Moodie Report

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19 ANALYSIS Retail Business Indicator October 2004 Food/confectionery grew at about the same level, except at The Plaza store where the store configuration combined with the drop in Japanese visitors, hindered progress. Classic fashion leathergoods saw minimal growth due to the many new branded boutiques in the East Hall which cannibalised our general merchandise business. On the record: Managing Director Alessandra Piovesana: Items which will impact our business in the next 12 months are the forthcoming Skycity, Disney entertainment park, the impact of the low-cost carriers (and established carriers reactions to them), and the PRC s fast-moving liberalisation of the skies. Retailer: Orient Lanka Location: Colombo, Sri Lanka Period: To 30 September Key numbers: Sales have risen +32% year-on-year; sales in August alone increased by +35% over last year Details: There have been some important mix changes in the customer profile. In particular, Sri Lankan passenger numbers have risen fast (+40%). The next two most important passenger nationalities are UK and German travellers. UK numbers rose +14.8% and German travellers +9.1%. The important Indian traffic edged ahead +1.1% on last year. Main drivers: Traffic growth for the period was +22% up on last year; August rose +16% year-on-year. On the record: Executive Director David King: It s a key market for us and is growing. The team [led by Managing Director Asia & Middle East Paul Topping] is doing a great job. Retailer: Qatar Duty Free Location: Doha, Qatar Period: To 30 September Key numbers: Sales are up +55% year-on-year, well ahead of budget. Spend per head to the end of August had risen from just US$13 in 2003 to US$17 and is set to climb to US$ Main drivers: Traffic and retail investment. Traffic for the year to September rose +30%, driven by the dynamic national carrier Qatar Airways. A constant search for new products and a strong commitment to customer service are other major factors. Last year 2.6 million passengers departed Doha Airport on Qatar Airways alone; this year that figure will reach 3.6 million and in 2005 it is set to rise to 4.5 million. The main departures store is undergoing a total refurbishment (due to be completed on 24 November) and planning and space allocation is well under way for the new airport, due to open in Details: Certain categories are growing dramatically. The Perfumery is up +72% year-on-year, while cosmetics and skincare have surged by +114%. Confectionery/Food rose +53% while the tobacco category climbed +48%. Liquor sales increased by +46% while electronics also impressed, rising by +35% year-on-year. On the record: Qatar Duty Free: By far the biggest achievement for us this year will be the refurbishment. We have already achieved tremendous sales results so far. Retailer: World Duty Free (BAA) Location: UK airports (various) Period: Second quarter to 30 June. Key numbers: The UK airports business, including World Duty Free (WDF), reported a rise of +11.2% in revenue for the three months to 498 million (US$908 million) and operating profit of 164 million (US$299 million), an increase of +15.5%. UK airport retail (including WDF) continued to deliver a strong performance with net retail income +12.3% higher at 146 million (US$266 million). Details: By focusing on maximising space effectiveness and innovation, particularly in wines and spirits and perfume and cosmetics, WDF raised its first quarter operating profit by +20% to 6 million (US$10.9 million). In particular, the radical redevelopments carried out at WDF s Heathrow T1 and T4 stores earlier this year made a significant impact on group performance. Summer fragrances again played a starring role. Main drivers: Passenger numbers at the UK airports grew +9.7% in the quarter to 35.9 million, led by +11.3% growth at London Heathrow and +15.8% at London Stansted. Traffic was boosted by a strengthening in the North Atlantic and long-haul sectors and the continuing rise of the low cost carriers. Retail performance exceeded the strong growth in passenger traffic for the quarter. On the record: BAA Group Retail Director Brian Collie: The significant rises seen across all three of our vital performance parameters traffic, revenue and profit illustrate the effectiveness of our retail business and our increasing confidence for the future. [Special contributor: Diana Albiol of Diana Albiol Media Relations] 40 The Moodie Report

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21 Your ideal business partner is here. Ideally you want your business to grow and become more cost efficient. So when looking for a partner to increase profits and enhance the traveller experience, what sort of company should you look for? One with a brand globally recognised for uncompromising levels of service. One with immense marketing power and direct access to millions of Cardmembers worldwide. American Express. With our global resources, financial stability and solid commitment, we re your ideal business partner. Contact us at: airports@aexp.com