By Sarah Townsend
Company 'trimmed the cloth' last year to mitigate against currency volatility and other factors
Dubai Duty Free is anticipating sales up from AED6.67 billion ($1.82 billion) in 2016 to AED6.8 billion ($1.85 billion) by the end of this year, according to the company’s executive vice-chairman.
Colm McLoughlin told Arabian Business in an interview: “We expect to end the year very positively. We expect to surpass our AED6.7bn budget to achieve turnover of AED6.8bn by the end of 2017. We’re giving ourselves 10 out of 10.”
McLoughlin revealed that, eight months into 2017 at the time of interview, the company had achieved sales 2.5 percent over budget – equating to AED107m ($29.1m) of additional turnover compared to 12 months earlier.
Perfumes and cosmetics remain the best performing product category, accounting for 24 percent of sales, followed by alcohol at around 12 percent and cigarettes at around 8 percent, McLoughlin added.
The positive forecast comes after Dubai Duty Free experienced a dip in annual sales since its record $1.9 billion recorded in 2014, to $1.82 billion last year (reported in dirhams as AED6.67 billion by the company in January).
McLoughlin said 2016’s performance was “satisfactory” but admitted that several factors had negatively impacted sales at the massive duty free retailer.
Among these factors were congestion at Dubai International Airport, “which affects how long people spend in the retail areas”, McLoughlin said, currency volatility, which made products more expensive for customers, and the strengthening US dollar, which made the company’s supply purchases pricier.
In addition, Dubai Duty Free lost around $2 million as a result of the US laptop ban earlier this year, while policy decisions by airlines to cut the weight of passenger baggage has also hit sales.
McLoughlin told Arabian Business negotiations have been held with suppliers in response to such changes. For example, Dubai Duty Free sales of weighty Nido powdered milk have dropped 40 percent in the last eight months, according to McLoughlin, so Dubai Duty Free is looking to sell smaller cartons of the product.
The company has made other internal adjustments to “trim the cloth”, including introducing controls on paid overtime, new shift timings, and cutting media and advertising spend, McLoughlin said.
He predicted sales growth to $3bn by 2022, driven by the expansion of Dubai’s second airport, Al Maktoum International (DWC), which will more than double the amount of retail space Dubai Duty Free operates, to 80,000 square metres.
Read the full interview with Colm McLoughlin in Arabian Business on Sunday