LVMH DFS exits Australia and New Zealand by Sep 2025 to sharpen returns
Bottom Line Impact
Near term revenue pressure is likely modest but the exit should lift Selective Retailing margins by 10 to 30 bps, improve capital efficiency, and reinforce LVMH brand equity by concentrating on higher productivity travel hubs and scalable beauty led omnichannel growth.
Key Facts
5- All ANZ T Galleria stores to close by end Sep 2025, with Sydney last trading 10 Sep 2025 and New Zealand operations closing 30 Sep 2025, including the Auckland Airport site
- DFS confirms ongoing global footprint review led by Chairman and CEO Ed Brennan, with prior closures in Saipan and Fondaco dei Tedeschi in Venice and exit from DFS Group interest in La Samaritaine
- Decision attributed to challenging economic conditions and a strategy to optimize global operations after roughly 30 years in the region
- Post Sep 2025 DFS will have zero physical presence in Australia and New Zealand, removing exposure to ANZ travel retail rent and labor cost structures
- Analyst estimate for LVMH impact in FY2025 to FY2026 includes one off restructuring and impairment charges of 50 to 120 million euro and annualized cost savings of 20 to 40 million euro, implying a 10 to 30 bps lift to Selective Retailing operating margin once normalized
Time Horizons
Key Roles Affected
Executive Summary
DFS will close all T Galleria operations in Australia and New Zealand by end September 2025 as part of a global network optimization, following prior exits in Saipan, Venice, and La Samaritaine. For LVMH, the move trims exposure to structurally weaker travel retail nodes, supports Selective Retailing margin mix, and frees capital for higher ROI hubs like Macau and Hainan and for Sephora expansion.
Actionable Insights
Immediate Actions (Next 30-90 days)
Quantify and disclose lease exit obligations, impairment charges, and expected annual run rate savings in Q3 to Q4 updates and commit to a Selective Retailing operating margin target uplift of 10 to 30 bps for FY2026
Rationale: Clear cost and margin signaling de risks the narrative and anchors valuation on profitable growth as DFS footprint is reshaped
Role affected:CFO
Urgency level:immediate
Short-term Actions (6-12 months)
Reallocate 100 to 200 million euro of FY2025 to FY2026 DFS capex toward Hainan, Macau, and Changi projects and set a hurdle ROIC of 15 percent plus with a 24 month payback
Rationale: Shifting capital to high throughput hubs and advantaged concessions maximizes return and offsets ANZ revenue attrition
Role affected:CEO
Urgency level:short-term
Deploy traveler CRM to target ANZ outbound customers with cross border offers and click and collect at Macau and Singapore gateways and integrate with maison loyalty for top 5 traveler source markets
Rationale: Recaptures spend leakage from closed stores and migrates ANZ clients to higher yield channels
Role affected:CMO
Urgency level:short-term
Strategic Actions
Run a zero based review of DFS sub scale locations and pursue partnerships or JVs with CDFG or Avolta where concessions are structurally sub economic
Rationale: Aligns footprint to scale advantages and lowers fixed cost intensity while preserving traveler penetration
Role affected:Chief Strategy Officer
Urgency level:strategic
Risks & Opportunities
Primary Risks
- Revenue leakage to competing duty free operators in ANZ and potential loss of high value traveler cohorts
- Higher than planned lease break costs or litigation with landlords extending into FY2026
- Perception risk for maisons tied to reduced visibility in ANZ travel retail
Primary Opportunities
- Margin mix improvement and lower volatility in Selective Retailing
- Capex redeployment to Sephora and DFS in higher growth hubs with superior concession economics
- Inventory productivity gains via consolidation into Macau and Hainan with higher sell through