In recent years, China’s economy has been under increasing pressure to slow down, significantly impacting the travel retail industry. The once thriving China Duty Free Group Limited Company (referred to as “China Duty Free”) is facing an unprecedented performance downturn. As a leading company in China’s duty-free retail sector, the latest financial reports from the company vividly reflect the declining trend in the industry’s business climate.
According to China Duty Free’s annual report for 2024 and the first-quarter financial report for 2025, the company achieved operating income of 56.474 billion yuan in 2024, a year-on-year decrease of 16.38%; net profit attributable to shareholders was 4.267 billion yuan, down 36.44% year-on-year. Of particular concern is the company’s net cash flow from operating activities, which saw a sharp 47.51% decrease compared to the previous year, indicating significant challenges to its core business performance and cash collection capability.
Looking at the quarterly breakdown, China Duty Free’s performance continued to deteriorate in the second half of 2024. The net profit for the second, third, and fourth quarters decreased by 37.6%, 52.53%, and 76.93% year-on-year, with the fourth quarter experiencing the most severe decline. Additionally, the company’s sales gross profit margin in the fourth quarter of 2024 was 28.54%, marking the lowest level since 2023 and further squeezing profitability. The weighted average return on net assets for the year was only 7.88%, hitting a new historical low for the same period.
Entering 2025, China Duty Free’s decline has not been effectively curbed. The financial reports show that the company achieved operating income of 16.746 billion yuan, down 10.96% year-on-year, with net profit attributable to shareholders at 1.938 billion yuan, a 15.98% decrease. Even after excluding non-recurring gains and losses, the net profit decline still reached 15.81%, indicating weak growth in core business operations.
Behind the significant decline in performance lies the sustained weak demand for travel consumption in China. Taking the example of the Hainan offshore duty-free market, the total shopping amount for the market in 2024 was 30.94 billion yuan, a 29.3% year-on-year decrease. From January to February of this year, the shopping amount in the Hainan offshore duty-free market continued to decline by 13.3% year-on-year, indicating a slow consumption recovery process.
As a result, many brokerage institutions have lowered their future performance expectations for China Duty Free. Dongwu Securities’ latest forecast for the company’s net profit attributable to shareholders in 2025 and 2026 is 4.98 billion yuan and 5.76 billion yuan, respectively, a reduction of over 17% from previous estimates; Galaxy Securities also adjusted its 2026 profit forecast from 6.72 billion yuan to 5.87 billion yuan, a decrease of 12.65%.
The continued decline in market confidence is also reflected in the capital aspect. The 2024 annual report showed that five of the top ten circulating shareholders had reduced their holdings. Northbound funds reduced their holdings by more than 12 million shares, with a total decrease of 3.75 million shares in fund holdings. Compared to the peak in 2021 when Northbound funds held over 279 million shares, currently only 73.8731 million shares are left, representing a reduction of nearly 74%.
Facing the double blow of fundamental pressure and a significant decline in institutional shareholding proportions, China Duty Free’s stock price has been declining for five consecutive years since 2021. In 2023, the company’s stock price dropped by nearly 51%, with the current total market value only remaining around 120 billion yuan, evaporating over 660 billion yuan from the peak in 2021.
As a wholly-owned subsidiary of China Tourism Group, China Duty Free, with its business covering major ports and downtown duty-free shops across the country, the precipitous decline in its performance undoubtedly serves as strong evidence of China’s economic slowdown and the sluggishness in travel consumption. In the overall economic environment of pressure and reduced consumer willingness, the duty-free industry relying on travel retail is facing the brunt of the impact.