Luxury travel retailer DFS Group’s disposals have been steadily shrinking the company’s presence—and relevance—in the global duty-free and travel retail channel it once dominated. Today, one of the most prominent of these deals was announced, with the majority LVMH-owned company agreeing the sale of its Greater China business to China Tourism Group Duty Free (CTG Duty Free).
The retailer has also decided to scrap its ambitious shopping and entertainment infrastructure project in Yalong Bay in Hainan, a popular duty-free province. A spokesperson told Forbes.com: “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.” Shenya Group is a regional Chinese real estate developer.
The Hong Kong and Macau sale comes on the heels of historic decisions to close DFS’s Guam duty-free operation after 50 years, by March, and at another pioneering location: Hawaii. There, after 63 years, the retailer is exiting the market, closing its Waikiki business next week on January 28, and its Honolulu Airport store on March 31. Its lease at Kahului Airport will end on August 31.
This all comes on top of T-Galleria closures or withdrawals of interest in New Zealand and Australia, plus Saipan, and Fondaco dei Tedeschi in Venice. LVMH also took arguably DFS’s most prestigious location, La Samaritaine in Paris into a new governance structure and out of DFS’s hands early last year.
Back in China, CTG Duty Free, which is listed on both the Hong Kong and Shanghai exchanges, is controlled by China Tourism Group and will acquire DFS’s stores in Hong Kong and Macau (excluding its City of Dreams operations) plus what the seller described as “intangible assets in Greater China.” These include a series of DFS brands and intellectual properties for exclusive use in this economic area.
A share buy-in is part of the deal
Markets reacted positively to the CTG Duty Free swoop; its stock closed on Monday up 6.7%, whereas LVMH’s fell by 4.3%. This underlines how differently investors view CTG’s expansion and DFS’s contraction.
The deal has some strings attached in the form of a memorandum of understanding (MOU) whereby the Chinese company will develop further collaborations with LVMH (more below) while a minority share subscription by the sellers is also embedded in the structure.
LVMH and the Miller family, the other core DFS shareholder, will subscribe to CTG Duty-Free’s Hong Kong shares, though the amount will represent a small part of their sale proceeds. The subscription in newly issued shares will be made upon completion of the transaction, expected in around two months’ time.
Billionaire Robert Miller is one of DFS’s two co-founders along with philanthropist Chuck Feeney who died in 2023 and relinquished his share of the company when it was sold to LVMH in 1997. The business—part of LVMH’s Selective Retailing division, which includes Sephora—has seen hard times in recent years due to subdued post-Covid travel and spending from the Chinese, a vital shopper base.
The DFS business, founded in 1960, has been loss-making in recent years. According to Forbes’ real-time net worth tracker, Miller’s fortune seems to have followed DFS’s performance—it peaked at $5.5 billion in 2020 and fell to $2 billion last year.
China’s global intentions reflected in CTG Duty Free
Beijing-headquartered CTG Duty Free is, by far, the biggest travel retailer in China with a 79% market share. The DFS transaction gives the partially state-owned listed company, more leverage in the international travel retail arena, where it has growth ambitions. Though Hong Kong and Macau are part of Greater China, they have more visibility on the world stage, an important benefit CTG Duty Free cannot achieve on the mainland alone.
The company’s executive director and president, Luke Chang, said: “This move aims to build a platform for promoting China-chic brands globally. We remain committed to providing high-quality travel retail experiences to both domestic and international tourists.” He added that CTG would actively help to implement the Greater Bay Area strategy of mainland integration, a plan personally driven by PRC President Xi Jinping.
LVMH veteran, Ed Brennan, who was brought in in November 2024 as chairman and CEO of DFS to rationalize the business, commented: “DFS’s well-established presence and operational excellence in Hong Kong and Macau is an achievement we take great pride in. The experience will be enhanced by the new skills and perspectives that CTG Duty Free will bring.”
LVMH stays involved
The MOU that CTG Duty Free and LVMH have entered into is for a strategic retail cooperation where the strategies of both parties can be aligned “with the current business model of the LVMH maisons.” They span fashion, drinks, hard luxury, and beauty, covering labels such as Christian Dior, Loewe, Louis Vuitton, Glenmorangie, Hennessy, Bulgari, TAG Heuer, and Tiffany.
This cooperation is designed to leverage the respective strengths of both parties to drive product sales, establish boutiques, and enhance brand promotion. For LVMH, maintaining influence in China’s duty‑free ecosystem—without the operational burden of DFS—may prove a more efficient route to brand success and give it an edge over its competitors.
