North American travel retailer Hudson has provided a trading update for the third quarter and nine months ended 30 September 2020.
The Dufry-owned retailer, which runs more than 1,000 stores in airports, commuter hubs, landmarks and tourist destinations, reported improved sales trends in Q3 2020, relative to the year-on-year sales performance in the second quarter.
Turnover for the three months ended September 30 2020 decreased from the prior year period by 74.1% to $135.4 million. Net sales declined by 74.4% to $130.9 million.
Duty paid sales have recovered quicker than duty free sales, due to the limited number of international flights and continued closure of the US/Canada border.
Turnover for the nine months ended September 30 2020 decreased by 63.6% from the prior year period to $538.6m. Net sales declined by 63.9% to $521.5m.
After temporarily closing more than 700 of its stores at the peak of the pandemic, Hudson has continued to gradually reopen shops and welcome back a number of furloughed team members. This is in alignment with the resumption of air and other travel.
Working in close partnership with airports and other landlords to best serve the needs of travellers and essential airport/commuter hub workers, Hudson has reopened over 300 stores as of 31 October 2020.
While strategically reopening stores as passengers return and when financially prudent, Hudson has continued to focus on cost savings initiatives and rent waivers and deferrals.
This has resulted in significantly reduced cash usage during the year. Cash usage has decreased from $92.4m in the first quarter to $21.1 million in the second quarter and $14.3 million in Q3.
Reduced passenger travel beginning in Q1 2020 was driven by coronavirus (Covid-19)-related concerns, event cancellations and government-imposed restrictions.
North American passenger volumes, however, have increased significantly since April. Year-on-year volume trends have improved consecutively each month from May to October.
US airport passenger levels were down approximately 65% year-on-year in October, compared to 95% at the height of the Covid-19 pandemic in April 2020. This highlights the resilience of the travel industry and the initial restoration of passenger confidence, which is driving the re-bound of Hudson’s business.
Hudson has also opened new stores in the first nine months of 2020, demonstrating the continued execution of its business strategy.
Openings includes four stores at Salt Lake City International Airport; two New York-branded travel convenience stores at the new arrivals and departures hall in LaGuardia Airport Terminal B; and a locally inspired travel convenience concept at Nashville International Airport.
Additionally, Hudson has rolled out vending machines providing round-the-clock access to health and safety supplies. It has also introduced Sunglass Hut shop-in-shops in a number of its travel convenience stores and expanded self-checkout capabilities to minimise contact and speed up checkout.
‘STRONG RECOVERY’ PREDICTED
Roger Fordyce, CEO, Hudson commented: “While the past seven months have been challenging, we’re continuing to position the company for a strong recovery in the immediate and long-term by minimising our cash spend, optimising operational efficiency, advancing our digital initiatives, and above all, prioritising the health and safety of our teams and customers.
“The progressive improvement in our business is due in large part to the support of our team members, customers, business partners and landlords, for whom we are extremely grateful. As the recovery continues, we are eager to welcome customers back to our stores, as we remain committed to being the Traveller’s Best Friend in the months and years to come.”
Meanwhile parent company Dufry Group has confirmed it is close to completing the full reintegration and delisting of the Hudson business, which is expected to close in Q4 2020.
This significant development comes after Hudson announced it had entered into a definitive agreement with Dufry — its controlling shareholder with 57.4% ownership of the company — on 19 August 2020.
Under the terms of the agreement, Dufry would acquire the remaining equity interests in the North American retailer for $7.70 in cash for each Hudson Class A share.
On completion of the transaction, Hudson will be an indirect, wholly owned Dufry subsidiary and be delisted from the New York Stock Exchange.