Deal to lift CTG Duty-Free's luxury brand portfolio

China Tourism Group Duty Free, or CTG Duty-Free, a leading Chinese retail travel operator, has reached an agreement to acquire DFS Group's travel retail business in Hong Kong and Macao, along with associated intangible assets on the Chinese mainland, for up to $395 million.

The transaction, which will be conducted through CTG Duty-Free's wholly owned subsidiary China Duty Free International Ltd, marks a significant step in the company's expansion within the Greater Bay Area.

The move is also expected to further accelerate CTG's efforts to promote Chinese brands globally, establishing itself as a key player in the luxury retail market.

As part of the transaction, LVMH, which owns a majority stake in DFS, and Robert Miller, DFS' cofounder and shareholder, will participate in a capital increase by subscribing to newly issued H shares listed in Hong Kong.

CTG Duty-Free and LVMH have signed a memorandum of understanding to explore future collaborations, particularly in retail, including product sales, brand promotion, and customer experience in China, according to the company.

Luke Chang, executive director and president of CTG Duty-Free, said that the acquisition is in line with the company's ambitions to establish a global platform promoting China-chic brands and expand its international business presence.

"This move will further expand our service network across the Greater Bay Area," said Chang. "It also positions us to actively implement the Greater Bay Area strategy and promote Chinese brands globally."

CTG Duty-Free has developed more than 200 stores in more than 100 cities at home and abroad.

Although its third quarter revenue for the 2025 fiscal year showed a 7 percent decline year-on-year to 39.86 billion yuan ($5.72 billion), with net profit dropping 22 percent to 3.05 billion yuan, the company reported strong performance in Hainan province, boosted by the zero-tariff policy for offshore duty-free shopping.

On Dec 18, its business in Hainan recorded a sales surge of 90 percent, reaching over 250 million yuan on the first day of island-wide special customs operations. Sales on Jan 1 surpassed 300 million yuan.

Meanwhile, DFS saw a modest improvement in its sales trend in the third quarter of 2025, particularly in Hong Kong and Macao, driven by a series of operational optimizations.

According to LVMH's third quarter results, the luxury retail giant's specialty retail division recorded a 7 percent increase in revenue year-on-year.

Michael Schriver, president of LVMH for North Asia, said of the agreement with CTG, "This operation underscores our confidence in the long-term potential of the Chinese market."