South Korean duty free giant Shilla Duty Free has confirmed in a regulatory filing that it is paying $54.7m for a 19.9% shareholding in Dongwha Duty Free.

Dongwha Duty Free reported a duty free sales turnover worth $217m in 2012, up 9.5% from $198m in 2011, while Shilla – South Korea’s second largest duty free operator – posted record sales of $1.7bn in 2012, up 26% from $1.37bn in 2011.

 

Shilla formerly advised that it has agreed the deal with Dongwha in a statutory regulatory filing and the cash injection makes sense at a time when Dongwha is looking at making a huge investment in its premises. Currently its downtown store consists of 5,400sq m of retail floor space.

 

Dongwha’s shop occupies the basement, first (ground) floor wings, half the second floor and the whole third floor in the Gwanghwamun Building – the shop size having expanded after Dongwha took over the second and third floor areas in 2011.

 

Meanwhile, South Korea’s second largest duty free operator Shilla is aiming for 20% sales growth in 2013 which will require sales to rise by $340m to hit $2.04bn for the year. Shilla holds two duty free concessions at Incheon Airport and within the aforementioned grand sales total these collectively accounted for $740m in sales last year, a rise of 18.5% over 2011.

 

Shilla also manages the highly successful Louis Vuitton boutique at Incheon, which last year generated sales of $92m, plus the hugely successful downtown Seoul flagship store, which recorded $580m-worth of sales.

 

This total was up 22% on sales in 2011 – not including $140m-worth of pre-order internet sales – up 7% last year. Shilla also generated sales of around $70m at Gimpo Airport and strong sales at its Jeju Island downtown shop.

 

Very detailed exclusive interviews with Shilla Duty Free and Dongwha Duty Free appear in the May issue of The Travel Retail Business magazine.

 

[Top image: Shilla Duty Free’s downtown Seoul store. Above: Dongwha Duty Free].