Yalong Bay was potentially a game-changing play for DFS.

In the wake of the DFS deal to sell off much of its Hong Kong and Macau retail estate, announced on Monday, the LVMH-owned travel retailer is also pulling out of a large retail and entertainment complex in Yalong Bay, Hainan, which has been in the making since 2023.

According to a statement given to Forbes, a DFS Group spokesperson said: “DFS has been reassessing our plans for Yalong Bay. With this latest transaction to sell our Hong Kong and Macau business, we can confirm DFS will not be proceeding with the Yalong Bay project. We thank Shenya for their collaborative partnership.”

In April 2024, DFS Group and Shenya Group, a regional real estate entity, held a highly publicised signing ceremony in a gesture of confidence in, and commitment to, the development of Hainan Free Trade Port and China’s tourism industry and luxury retail market. The event was witnessed by the Sanya Municipal Government.

The Yalong Bay project would have been DFS Group’s most ambitious expansion, attracting an estimated 16-18 million visitors per year by 2030. It was slated to become Sanya’s premier destination for luxury shopping, featuring around 1,000 luxury brands, plus top-end accommodation, dining, and entertainment. The plan for the 128,000sq m property included the world’s largest DFS beauty store at 9,000sq m, a deluxe DFS Circle members’ lounge (650sq m), and the largest indoor children’s playground in Yalong Bay.

A slowdown and overhaul

At the time of the signing ceremony, when economic conditions in China were still problematic, the then DFS Group CEO, Benjamin Vuchot, was confident about a recovery. He told TRBusiness: “Overall, we are greatly encouraged by the ongoing rebound of the luxury market in the APAC region. After a period of exceptional growth, the market is now entering a phase of normalisation, influenced by certain macroeconomic factors such as a global economic slowdown and currency fluctuations, which impact spending power.”

However, a few months later, Vuchot stepped down, and Ed Brennan, a long-time senior executive at LVMH, took the DFS reins as interim Chairman and CEO. Under his tenure, the travel retailer has undergone a major overhaul aimed at returning the business to profitability. The latest casualty in that streamlining process has been the company’s involvement in the Yalong Bay project.

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