Profits Declining! "Duty-Free Moutai" Joins Forces with LVMH to Storm Hong Kong and Macau

Known as the “Duty-Free Ma” in China, China Duty Free Group recently released its 2025 performance brief. Under the dual pressures of slowing consumer demand and industry cycle downturn, the company continued its decline in 2024, with both revenue and net profit decreasing.

However, despite the sluggish full-year performance, the company showed clear signs of reversal in the fourth quarter, with revenue and profits turning positive, indicating a bottoming out and recovery of its operating fundamentals.

Non-recurring factors dragged down the full-year results

In 2025, China Duty Free Group’s annual performance continued to weaken.

During the reporting period, the company achieved a total operating revenue of 53.694 billion yuan, down 4.92% year-on-year; net profit attributable to shareholders was 3.586 billion yuan, down 15.97% year-on-year; net profit excluding non-recurring gains and losses was 3.544 billion yuan, down 14.48% year-on-year. Basic earnings per share were 1.7332 yuan, a decrease of 15.97%.

Regarding the decline in net profit for the full year, China Duty Free Group admitted that it had impaired goodwill related to key subsidiaries, which had a certain impact on net profit.

Despite the annual performance pressure, the company’s quarterly results showed significant differentiation, with the fourth quarter becoming a critical turning point for bottoming out and recovery.

The financial report shows that in the fourth quarter, the company achieved an operating income of 13.831 billion yuan, up 2.81% year-on-year; gross profit margin of main business increased by 4.12 percentage points; net profit attributable to shareholders was 534 million yuan, up 53.49% year-on-year. Excluding goodwill impairment losses, net profit attributable to shareholders increased by 150.63% year-on-year.

“Recently, the company has fully seized the opportunities presented by the implementation of new policies for offshore duty-free shopping in Hainan and the official closure of the entire island of Hainan. Key stores in Hainan achieved new highs in sales and foot traffic during the Spring Festival,” China Duty Free Group stated.

According to reports, since the closure of Hainan Free Trade Port on December 18, 2025, as of January 10, 2026, the number of people shopping duty-free under customs supervision in offshore duty-free stores reached 585,000, with a total amount of 3.89 billion yuan, representing year-on-year increases of 32.4% and 49.6%, respectively. On average, about 24,000 people shop duty-free in Hainan daily, with an average daily shopping amount of 1.6 billion yuan, both higher than before the closure.

With an approximately 85% market share in Hainan offshore duty-free retail, China Duty Free Group has become a core beneficiary of policy benefits. As policy dividends continue to be released and operational efficiency improves, the recovery momentum of the company’s core business is expected to further solidify in 2026.

Aggressive overseas acquisitions in Hong Kong and Macau

Facing domestic duty-free market growth pressures and intensifying competition, China Duty Free Group is accelerating its expansion into the overseas travel retail market to enhance its international competitiveness.

Recently, the company completed a $294 million acquisition of stores and related intangible assets of DFS Group in Hong Kong and Macau. Meanwhile, major shareholders of DFS Group, LVMH and the Miller family, subscribed to additional H-shares issued by China Duty Free Group.

After the transaction, China Duty Free Group, through its wholly owned subsidiary China Duty Free International, officially took over and began operating DFS Group’s premium travel retail stores in Hong Kong and Macau, and directly acquired a series of DFS brands, along with exclusive rights to use certain IP assets in China.

Public information shows that DFS is a leading global luxury travel retailer, founded in 1960, with stores located in major airports and key city centers worldwide.

China Duty Free Group has stated that this acquisition marks the beginning of its overseas expansion and M&A efforts, and the company will continue to increase overseas expansion efforts and boost overseas revenue share.

Although the opening of overseas markets and favorable policies have created growth potential, China Duty Free Group’s recovery path still faces multiple uncertainties. The industry’s competitive landscape remains unstable, and expectations of relaxed domestic duty-free licenses continue to suppress industry valuations. Whether performance can shift from the fourth quarter’s turning point to a full recovery still requires ongoing market validation.