A 150 billion duty-free retail giant secures strategic investment from LV

Source: 21st Century Business Herald Author: Tan Lu Yin Qianyi

The duty-free shop industry is undergoing major changes.

On March 19, China Duty Free Group (CDFG) announced that it had completed the acquisition of DFS Group’s stores and related intangible assets in Hong Kong and Macau, forming alliances with the LVMH Group and the Miller family behind DFS.

“Today’s transaction is not the end, but the beginning of deep integration and value creation. Next, CDFG will quickly initiate integration and operational work,” said Chang Zhujun, Director and General Manager of CDFG, at the signing ceremony.

In this deal, CDFG invested $295 million USD, approximately 2 billion RMB, to acquire the assets of a competitor.

Meanwhile, LVMH Group and the Miller family subscribed to newly issued H-shares of CDFG, totaling about HKD 690 million, becoming strategic shareholders.

From rivals to partners, they are now bound by mutual interests to grow stronger together.

On March 20, a reporter from 21CBR contacted CDFG’s investor relations department. A representative stated that after the acquisition, the 8 DFS stores in Hong Kong and Macau will continue to operate under the DFS brand, maintaining their original products and customer base.

Turning enemies into friends

DFS pioneered the concept of “travel retail.” Since being acquired by LVMH in 1996, it has been a key retail channel for luxury brands.

The assets acquired by CDFG include 8 DFS stores in Hong Kong and Macau.

In Hong Kong, CDFG purchased the store at Hysan Place in Causeway Bay, while the Tsim Sha Tsui store at New Sun Plaza was excluded.

According to the announcement on the 19th, the Tsim Sha Tsui store was removed because it did not meet the conditions specified in the Framework Agreement, with no detailed explanation provided. This adjustment lowered the total acquisition cost from the previously announced maximum of $395 million USD to $294 million USD.

On the afternoon of March 20, a reporter visited the Hong Kong Causeway Bay store and found that it is seamlessly connected to the subway station, located near retailers like Luk Fook Jewelry, Chow Sang Sang, Citibank, and Bank of China, with a prime location.

Inside, there are full counters for major brands like Dior, Lancôme, SK-II, with discounts ranging from 45% to 85%. The majority of customers are young Mandarin speakers.

In Macau, DFS has been deeply rooted for many years. The 7 stores acquired by CDFG are located in The Londoner shopping center, Galaxy Macau, Studio City, Macau MGM, Wynn Palace, Four Seasons, and City of Dreams, all in key locations within major integrated resorts.

This acquisition fills a gap in Macau’s high-end domestic duty-free market, providing a mature and highly profitable channel network.

The profitability of DFS’s Hong Kong and Macau assets has improved.

In 2024, revenue is projected at 4.149 billion RMB, with a net profit of 128 million RMB; in the first nine months of 2025, profitability has significantly rebounded, with revenue of 2.754 billion RMB and net profit of 133 million RMB.

However, the debt ratio remains high, reaching 95% by the end of September 2025.

Following the acquisition, the integration of both parties’ businesses has begun immediately.

Visiting DFS’s official website, selecting Hong Kong or Macau will display an important notice: DFS officially ceased website services on March 19, and will migrate to a new website managed by CDFG.

There is also an announcement regarding the migration of Hong Kong and Macau members to the CDF membership system.

When asked by 21CBR about DFS Macau’s customer service, a representative responded that after joining the CDFI Group, DFS stores in Hong Kong and Macau will continue to operate normally.

Member benefits (including membership levels and points) for DFS stores in Hong Kong and Macau will transition to the CDF Member Program starting March 20.

Breaking new ground

This major acquisition comes at a time when CDFG is actively transforming.

Leveraging the offshore duty-free policy benefits in Hainan, the company’s performance peaked in 2021 before entering a period of fluctuation.

From January to September 2025, revenue reached 38.934 billion RMB, with a net profit of 3.052 billion RMB, down 22.13% year-over-year.

On March 20, CDFG’s Hong Kong-listed shares closed at HKD 69.5, 9.98% below the issuance price of HKD 77.21. Its A-shares are valued at about 150 billion RMB.

Fortunately, the company’s balance sheet remains healthy, with approximately 32 billion RMB in cash and equivalents as of September 2025, providing confidence for overseas acquisitions.

CDFG aims to become a travel retail operator. The acquisition of DFS assets and the investment from LVMH serve as catalysts for accelerated development.

Not only does CDFG gain channel resources in one go, but it also achieves a dual ownership stake with LVMH and the Miller family.

LVMH, the luxury empire, owns numerous high-end brands. Through introducing premium brands, exclusive product procurement, joint marketing, and customer data sharing, CDFG is expected to realize strategic synergies and expand globally.

Michael Schriver, President of LVMH North Asia, stated that LVMH’s pursuit of quality and creativity aligns closely with CDFG’s mission to “create a high-quality travel retail experience.”

“We aim to build a ‘super platform’ that showcases business value and cultural confidence.”

On March 19, Chang Zhujun said that in the future, they can do more interesting and meaningful things together, becoming stronger and going further.