Duty-free industry stunned by WDFA sale to former Perfumania executives

Print Article E-Mail Article

Exclusive: By Martin Moodie

The duty-free industry has been shocked by yesterday's sudden sale of BAA subsidiary World Duty Free Americas (WDFA) to Miami-based Duty Free Acquisition Corp, as exclusively announced by Duty-Free News International.

Although the division (formerly Duty Free International before its $674m acquisition by BAA) was declared "non core" two years ago by BAA, few observers were expecting a sale, especially given the post-September 11 crisis in the US. And even fewer, if anybody, would have predicted the identity of the purchaser.

The Falic Group, parent company of Duty Free Acquisition Corp, is well-known to the beauty industry, in particular. The Falic family-owned company is closely associated with US domestic discount retail chain Perfumania and its chairman Ilia Lekach, who is also head of Parlux Fragrances, the US NASDAQ-listed manufacturer of fragrances and related products.

Duty Free Acquisition Corp chairman Simon Falic assumed the post of chief financial officer and chief operating officer of Perfumania in October 1998. He became ceo, overseeing the development and expansion of the discount chain and wholesale distributor, which at that stage had 280 stores in 36 US states. He resigned as ceo some 18 months ago.

The announced sale was valued at $121m, of which $115m was accounted for by a World Duty Free Americas 7% bond, due for payment in 2004, which remains with the transferring business. For BAA that represents a $6m immediate payment and the removal of a $115m liability from its balance sheet. Following write-downs, closures and divestments within the WDFA business over the past two years, the deal represents a welcome, albeit modestly-priced, exit from an investment that the company admits has not worked out. The September 11 effect in the US will have driven down the price but confirmed BAA's determination to get out of the business and concentrate on its core airports.

Falic said his group was extremely excited about the purchase of WDFA. "Our origins and expertise in the luxury goods sector have lead us into the duty-free marketplace where our goal will be to provide international travellers with an unparalleled range of world quality brands and products, together with the best possible customer service," he said.

TRW understands that WDFA's senior management, headed by ceo Ramon Bosquez, was anxious to lead a buy-out but ran out of time in their efforts to match the Duty Free Acquisition Corp bid. No announcement has been made about future management under the new owners, although we understand that existing senior executives have been told their positions are secure.

• Further reaction from the Falic Group and BAA group retail director Brian Collie will be included in a special WDFA sale report in the October 15 issue of Duty-Free News International.