Airport Retailer Hudson Group Is Seeking an IPO in 2018

If you've flown around the United States or Canada, you've probably encountered a Hudson Booksellers shop. Most of the chain's 989 outlets are located in airports, including in 24 of the top 25 largest in the United States.

Hudson Group is a wholly owned subsidiary of Dufry, the world's largest airport retailer by sales.

Dufry intends to launch an initial public offering for its Hudson unit in 2018 while still retaining majority ownership.

Hudson has filed an investor's prospectus with the Securities and Exchange Commission, saying it hopes to raise up to $100 million. That number is usually a placeholder that's subject to change.

For the first nine months of 2017, Hudson reported $24.2 million in profit on around $1.35 billion of revenue.

Hudson's earnings were 54 percent higher, and its sales were 6 percent higher, in the first nine months of 2017 than in the comparable period a year earlier.

In 2016, Hudson Group's revenue was $1.69 billion, a jump of 20 percent from 2015. Its profit spiked 172 percent, to $49.8 million, over the prior year.

Needing Capital to Fuel Growth

While books are its signature product, Hudson’s biggest sellers are beverages, candy, and food — a category that accounted for $572 million, or about a third, of its revenue last year.

Perfumes and cosmetics were its next-largest category, accounting for 14 percent of revenue last year. Books accounted for only 12 percent.

Hudson claimed that it can grow by riding on a wave of increasing foot traffic at airports.

That may be true. The number of passengers at airports increased at a compound annual growth rate of 3 percent between 2010 and 2016, according to the International Air Transport Association. The passenger growth trend will likely continue for many years, said the World Airports Council.

But growing traffic isn't enough. Research by parent company Dufry earlier this year found that only 16 percent of the passengers going through an airport in Europe buy something, The company needs to do more to boost same-store sales worldwide.

To that end, the company wants to invest in technology to allow customers to order items ahead of arrival. It also wants to install machines at more locations to enable customers to do self-checkout.

Hudson hopes to use money from an IPO to reduce its debt, pay for acquisitions, and add more non-airport locations — similar to the stores it opened last summer at the Hard Rock Hotel & Casino in Las Vegas.

Dufry has hired Credit Suisse as the lead underwriter to make the IPO happen. But it first started shopping the idea to investors in August. There is no insight on when in 2018 an IPO may happen, or even a guarantee that it will happen.