LVMH’s DFS Group Plans To Open First Europe Shop in 2016

DFS Group, an operator of duty-free shops controlled by LVMH Moet Hennessy Louis Vuitton SA, said it plans to open its first stores in Europe to cater to Chinese consumers who travel more frequently to the region.

The company plans to add “a few” outlets in Europe in 2016 and is looking at prime destinations for Chinese tourists, such as France, Italy and Switzerland, Chief Operating Officer Michael Schriver said. DFS, which gets more than half of its global sales from Chinese shoppers, currently has no outlets in Europe.

“We invest a lot in building awareness among mainland Chinese at our shops here in Hong Kong and in other parts of the world,” Schriver said in an interview in Hong Kong yesterday. “Chinese customers will continue to account for more than half of our revenue in several years to come.” He didn’t disclose the number of stores planned for Europe.

By turning their holidays into lengthy shopping excursions, the Chinese are propping up European sales and aiding the outlook for brands from Prada SpA to Kering SA’s Gucci. Chinese consumers overtook U.S. shoppers last year to become the world’s biggest buyers of luxury goods, accounting for 25 percent of global sales through purchases at home and overseas, according to consultant Bain & Co.

The Hong Kong-based company expects its sales to continue to grow in “double-digits” next year, Schriver said. Tax-free shopping by Chinese residents on overseas trips grew by about 20 percent on average in the first quarter of 2013, according to Global Blue, which runs a transaction service for international shopping.

Floor Space

DFS plans to increase floor space by 40 percent at its existing stores in Macau to cope with the increasing number of Chinese tourists, Schriver said.

Founded in the 1960s in Hong Kong, DFS sells more than 700 brands from Dior to Absolut vodka, at airports and in downtown stores in 11 countries. Travelers can buy goods and claim back value-added tax when they leave the country.

French luxury conglomerate LVMH bought a majority stake in DFS Group in 1997. DFS Group, Paris department store Le Bon Marche and cosmetics chain store Sephora are among shops that form LVMH’s Selective Retailing division, which accounted for 28 percent of its sales in 2012.

The Selective Retailing unit will overtake fashion and leather goods as LVMH’s biggest business by 2018, analysts at Sanford C. Bernstein estimate.

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