Global Blue anticipates strong 2023 with imminent return of Chinese travellers

Global Blue anticipates a strong 2023, buoyed by its return to profitability and the projected return of Chinese travellers. The Swiss headquartered provider of Tax-Free Shopping and associated services reported total sales in store, equivalent to payment volume, of €5.8bn in Q4 2022, the company’s Q3. This was just 6% below 2019 levels. While tax-free volumes were impacted by the continued absence Chinese and Russian shoppers and the UK government’s decision to abolish tax-free shopping in 2020, volumes in Advanced Payment Products (mainly DCC) have returned to pre-pandemic levels.

Total group revenue more than doubled in Q4 to €86.7m compared to 2021, though it remained 21% below 2019 levels. The company has maintained strong cost control measures as its revenues recover, with operating expenses up 33% on the year but 22% lower than 2019.

Tax-Free Shopping is Global Blue’s largest business unit, with over 300,000 merchant stores offering its services. Continental European tax free volumes are trending ahead of 2019 with US and Gulf visitors spending particularly freely. Management is confident that volumes in Asia Pacific will soon exceed 2019 levels as mainland Chinese shoppers have already started reappear in Singapore and South Korea. Survey evidence suggests that many Chinese are eager to resume traveling in 2023 and spend some of the €2.1tn savings built up during Covid. However, air travel capacity is projected to be limited in 2023, reaching only 25% of 2019 levels by April and 75% by Christmas. This means a full recovery won’t happen until 2024.

Global Blue’s Advanced Payment Product division, mainly DCC, has fully recovered, recording €1.4bn in volume in Q4, 17% higher than in 2019. However, revenues were only 1% higher, indicating some issues with pricing pressure and/or the customer mix. 

The company’s newest division, Complementary Retail Solutions, is an investment portfolio of businesses that help merchants engage with shoppers. In 2022, Global Blue acquired ShipUp, a French business that helps retailers communicate with customers post-purchase, for €35m. ShipUp has an annualized revenue of €5.5m and losses of €4.8m. Global Blue also acquired a small stake in Reflaunt, a circular fashion commerce provider, for €2m. These acquisitions complement a minority investment made in Twig, a circular commerce finance provider earlier this year.

Global Blue’s strong balance sheet, following the €211m equity investment from Certares and Knighthead in June 2022, is expected to enable the company to pursue further acquisitions. 

Overall, group operating profit was €9,2m compared to a loss of €19,4m in the same quarter of 2021 and a profit of €11m in 2019. Adjusted EBITDA, the company’s preferred measure of profitability, was €24.1m with positive results from TFS and AVP. The new CRS division made an EBITDA loss of €2.2m on €6.1m sales.

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