DFS Signs Master Concession at China's Hainan Meilan International Airport

Business Wire, Sept 29, 2004

HONG KONG -- DFS Group Limited, the world's largest travel retailer, today announced it has signed its first concession in the People's Republic of China (PRC) since moving corporate headquarters to Hong Kong earlier this year. The 10-year master concession is for all retail operations at China's seventh largest airport, Hainan Meilan International (HMIA), on the resort island of Hainan. The new master concession will be phased in throughout 2005.

Under the new agreement, DFS will add internationally branded beauty, fashion and watch stores to the existing retail mix, which currently consists primarily of locally themed stores.

DFS moved its international headquarters from San Francisco to Hong Kong in January as part of its strategic objective to focus on developing its business in the region.

While terms of the agreement are confidential, DFS Chairman and CEO Edward J. Brennan said, "Our objective is to make HMIA retail a world class operation, featuring top brands, exquisite stores, and an appeal that suits the Hainan Island destination. We are deeply committed to developing our business in the PRC and we intend to make this airport the retail showpiece for all of China."

DFS Merchandising President Michael Schriver noted, "The new stores will carry luxury name brands which are popular in the Chinese market, including Biotherm, Dior, and Lancome cosmetics; Cartier, Omega, Rado, and Tissot watches, along with leading fashion brands for the market."

HMIA is publicly traded and Copenhagen Airport, which owns 20% of the airport, is the strategic investor in the Airport. According to the CEO, Mr. Wang Zhen, and Kristian Bjorneboe, Director of Commercial Development for the airport, "We sought the best possible retail partner for our airport and we believe we have found that in DFS. They are committed to creating an outstanding shopping environment in HMIA and have the credentials to deliver on that promise."

HMIA is located on the north coast of Hainan Island in the South China Sea. Hainan is the PRC's most popular tropical resort destination, "China's Hawaii." World-renowned events such as the Miss World pageant and the Asia Leaders Conference have been held there in the last two years. Hainan is only 50 kilometres from the Mainland and 700 kilometres from Hong Kong. The airport currently attracts close to four million visitors a year, mostly from the PRC and expects more growth in the future. About two-thirds of the HMIA arrivals are tourists. The airport, which opened five years ago, is 25 kilometres from Haikou, the capital of the Hainan Province.

"We are proud that HMIA has welcomed us by awarding DFS this master concession," said Brennan. "It is an important first step in what we intend to be a long and productive series of partnerships for both DFS and the Chinese airports with which we hope to do business. We believe that our product offerings, wide selection of brands, pricing strategies that offer significant value, and deep knowledge of effective travel retail practices make us well-positioned in this market. In addition, we expect that our unique worldwide guarantee by which a product purchased at one of our stores can be returned to any of our stores if the customer is not satisfied will be well received by tourists traveling to and from Hainan. We have recently added after-sales service centers in Shanghai and Beijing in addition to the after-sales service centers we have had in Tokyo and Seoul for many years."

DFS Group Limited is the world's largest travel retailer with 135 stores in 15 countries and territories. The company has approximately 5,500 employees and manages 78 airport concessions in the Asia, Pacific and North America regions. DFS is majority owned by LVMH Moet Hennessy Louis Vuitton, the world's leading luxury products group.