SYD to throw open doors to Louis Vuitton and 11 luxury brands in 2022

By Luke Barras-hill |

Louis Vuitton will open its largest standalone luxury retail store at Sydney Airport (SYD) International Terminal 1 in 2022, it has emerged.

In a statement twinning with the airport’s half-year results announced today, the operator confirms that the arrival of the iconic fashion house will anchor a ‘reinvigorated luxury retail precinct’.

A further 11 premium labels will open their doors in the same year: Saint Laurent, Dior, Moncler, Loewe, Celine, Bottega Veneta, Prada, Balenciaga and Gentle Monster, with a further two in final negotiations.

The new brands have agreed six-year lease terms through to 2027.

Sydney Airport Chief Commercial Officer Vanessa Orth.

SYDNEY AIRPORT: A LUXURY RETAIL DESTINATION

Vanessa Orth, Chief Commercial Officer, Sydney Airport commented: “When the doors to our Louis Vuitton store open in 2022, travellers from Sydney Airport will be able to experience the most extensive collection of luxury and boutique travel retail anywhere in the Southern hemisphere.

“We’re looking forward to welcoming international passengers back to Sydney Airport and bringing the fun and glamour back to travel.”

The agreement with Louis Vuitton reflects the airport’s status as an Australia’s international gateway and will result in it emerging as a leading player in global travel retail, states the operator.

Orr continued: “Before the pandemic we saw that travel retail trends were evolving. Impulse buying was on the way out and travellers were doing much more research and pre-planning their purchases.

“With that in mind we’ve been deliberately seeking to attract iconic retail partners like Louis Vuitton who will drive preference and make the airport a luxury retail destination in its own right.”

Aside the new brand arrivals, existing luxury tenants are renewing their positions.

Gucci is set to double its gross floor space to approximately 300sq m and Tiffany&Co will relocate and build an all-new, custom designed store.

“The commitment of these [further 11] brands demonstrates faith in the future of international travel and confidence that Sydney Airport will remain at the heart of Australia’s international aviation network,” added Sydney Airport Chief Executive Officer Geoff Culbert.

HALF-YEAR RESULTS

News of the openings comes as SYD announced its half-year results today (20 August) covering the six months ending 30 June.

Retail revenue fell 73.4% on an adjusted basis year-on-year to total AUS$87.4 million/US$67.2 million, punished by a 91% fall in international passenger volumes to 318,000 – approximately 4% of pre-Covid levels.

When adjusted to account for rental abatements and doubtful debt, retail revenue was AUS$27.5m/US$21.2m.

 

Click to enlarge. Source: Sydney Airport – 2021 half-year results presentation.

In June, 59% of stores were trading –up from 41% in December 2020 – with 73% of contracted rents (excluding duty free contract rent) abated in the first half of the year. Correct as of 30 June, the retail occupancy level stood at 97%.

Total passenger traffic fell 36.4% year-on-year to six million as revenue declined 33.2% on the prior corresponding period to AUS$341.6m.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) for the period equalled AUS$210.8 million, down 29.8% year-on-year.

As of 30 June, SYD’s liquidity stood at AUS$2.9bn, comprising AUS$500,000 in available cash and AUS$2.4bn of undrawn bank debt facilities. Net debt totalled AUS$7.5bn.

Click to enlarge. Source: Sydney Airport – 2021 half-year results presentation.

Faced with continued traffic uncertainty, the airport has extended its international airline agreements by 12 months to 30 June 2022.

As reported in May, the airport announced its commitment to reach net-zero emissions by 2030.

Culbert added: “It was a challenging six months, but we were encouraged to see passenger traffic rebound strongly every time borders were open. From January to April, we recovered to 65% of our pre-Covid domestic passengers and in just over two months between late April and June, trans-Tasman traffic recovered to more than 40% of pre-Covid levels. We’re optimistic that this trend will repeat itself as the vaccine program gains momentum and we see a sustained easing of restrictions.

“The pathway to the recovery is clear. Governments at all levels are highly motivated to roll out the vaccine, which has now been tied to the lifting of restrictions. As border restrictions are eased, international and domestic travel will be back, and Sydney Airport will be ready to go.”

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