First quarter sales at Dubai Duty Free surge 11% as departures take advantage of VAT exclusion

Dubai Duty Free said on Thursday its first quarter sales rose by 11 per cent year-on-year to Dh1.91 billion, as the implementation of VAT in January – which is not applicable in Dubai airports’ departures – helped to boost sales there.

DDF, which posted record sales of Dh7.05bn in 2017, said sales in March hit the monthly record of Dh660.4 million, a 10 per cent increase on the period a year earlier.

“Sales are ahead of passenger [growth] numbers at Dubai International Airport, and we are seeing double-digit growth across a wide number of categories,” said Colm McLoughlin, executive vice chairman and chief executive of DDF.

“While the introduction of VAT and excise duty in our arrivals duty free has resulted in a drop in revenue in these areas, the fact that VAT is not applicable for the majority of sales in departures has contributed to an increase in certain categories for departing and transit passengers.”

DDF expects sales to increase by more than half to $3bn by 2022 as Dubai International Airport, the world’s busiest for international travel, boosts capacity to meet a rise in tourist traffic, Mr McLoughlin told The National in February.

DDF, which grew its annual revenues by 5.6 per cent in 2017, expects sales to reach Dh7.3bn this year. Expansion work at DIA, which should boost passenger capacity by around a third to 118 million by 2023, is also benefiting DDF.

The increase in sales is in part a result of a rise in the number of Chinese tourists, the biggest customers, who account for 9 per cent of total sales, as well as the return of Russian tourists.

Both nationalities have been granted visas on arrival by the UAE.

The number of passengers from Russia at DIA climbed 28 per cent to 1.3 million in 2017, while visitor numbers from China surged 19.4 per cent to 2.2 million as a result of the relaxation in visa restrictions.

Liquor, perfumes and tobacco held the top three spots of goods categories sold in the first quarter of the year. Perfume sales rose to Dh276m, accounting for 14 per cent of total revenue. Sales of tobacco increased by 37 per cent to Dh220m, while sales of cosmetics were up 25 per cent to Dh183m, representing 10 per cent of DDF’s total.

Electronics sales grew 34 per cent to Dh169m, while watches rose by 16 per cent to Dh127m, according to DDF.

“There are a number of factors behind the sales growth, including the refurbishment of Concourse C, which will be fully completed shortly and other projects,” said Mr McLoughlin.

Sales are ahead of passenger numbers at Dubai International Airport, and we are seeing double-digit growth across a wide number of categories COLM MCLOUGHLIN DDF executive chairman