Duty Free International reports second quarter and six months sales and earnings.

RIDGEFIELD, Conn.--(BUSINESS WIRE)--Aug. 29, 1995--Duty Free International Inc. (NYSE:DFI) today reported financial results for the second quarter and first six months of its fiscal 1996 year.

Net sales for the quarter ended July 30, 1995 were $130,359,000, down 5% from $137,241,000 in the second quarter a year ago. The decline in sales for the quarter is primarily attributable to the nearly 50% devaluation of the Mexican peso versus the U.S. dollar which caused a 34% decrease in the Southern Border Division's sales compared with the same period last year. Net earnings for the quarter were $4,516,000 or $.17 per share, an 11% increase from $4,053,000, or $.15 per share, in the year earlier period. According to Alfred Carfora, president and chief executive officer of Duty Free International, "The increase in net earnings, despite the shortfall in Southern Border Division sales, is the result of continued expense reductions initiated by the company. The earnings for this quarter exceeded our expectations and reflect management's commitment to improve profits in spite of adverse outside influences."

For the six months ended July 30, 1995, net sales totaled $239,707,000, up 9% from $220,484,000 in the first half of the prior year. The company's sales for the six months, excluding Inflight sales, were $156,968,000, a decrease of 13% from the same period a year ago. This decrease resulted primarily from the Mexican peso devaluation which resulted in a 36% decrease in Southern Border Division sales when compared to the prior year. Net earnings for the six months were $5,982,000, or $.22 per share, a 4% decrease from $6,223,000, or $.23 per share, for the prior year.

Airport Division sales for the quarter and six months were $26,307,000, up 11%, and $49,590,000, up 13%, respectively, over the same period last year. This performance is attributed to an increase in foreign tourists traveling to the United States. During the first quarter, the division opened 12 stores in the new Denver International Airport and two new duty free shops in Boston's Logan International Airport. A third duty free shop is scheduled to open at Logan Airport by the end of the third quarter. In June, 1995, the division opened a new duty free shop in San Juan International Airport, Puerto Rico, increasing to seven the number of stores operated there. Sales of approximately $810,000 and $1,253,000 were made in last year's second quarter and six months, respectively, at stores closed later in fiscal 1995 as part of the company's reorganization.

Inflight Division sales for the quarter were $44,924,000, up 12% from the prior year. Sales were $82,739,000 for the six months ended July 30, 1995. Inflight was purchased by the company on May 1, 1994. As recently announced, the company will relocate the Inflight headquarters from New York to its Ridgefield offices as of February 29, 1996. Carfora commented, "The Inflight Division continues to post strong sales gains and provides the company with substantial growth opportunities. The consolidation of Inflight's operation into DFI will permit the company to further leverage upon its already established infrastructure."

Northern Border Division sales in the second quarter were $22,560,000, up 2% from the prior year. For the six months, sales were $36,984,000, virtually the same as the prior year. Improvements, which are the result of cost containment measures combined with suggestive selling techniques focused on increasing average transaction spend, offset the continued negative trend in Canadian traffic. At the end of July, 1995, the company completed its acquisition of two duty free stores, one in Port Huron and the other in Sault St. Marie, Michigan. Carfora commented that "The acquisition of the Michigan locations increases the reach of our Ammex Division and provides us opportunities at two additional major crossings." The effect of these two stores on the division's sales for the quarter and six months was not material. Sales of approximately $526,000 and $829,000 were made in last year's second quarter and six months, respectively, at stores closed later in fiscal 1995 as part of the company's reorganization.

Southern Border Division sales for the quarter and six months were $22,707,000 and $42,976,000, down 34% and 36% from the prior year, respectively. The decline in sales is directly attributable to the devaluation of the Mexican peso against the U.S. dollar. According to Carfora, "Although the effects of the peso devaluation continue to impact Southern Border sales, these operations remain profitable. Our cost reduction program, initiated in January, 1995, will realize approximately $5,000,000 of savings on an annualized basis. Near term improvement will not be recognized; however it is our belief that we will see a decline in decreasing sales beginning in our fourth quarter."

Diplomatic and Wholesale Division sales for the quarter and six months were $13,861,000 and $27,418,000, down 17% and 16%, respectively, from year-ago levels. Management continues to de-emphasize this division's relatively low gross margin sales. Sales of approximately $1,111,000 and $2,227,000 were made in last year's second quarter and six months, respectively, by a business sold in March, 1995 (and generating approximately $281,000 of sales in this year's first quarter and six months periods) as part of the company's reorganization.

Duty Free International is the leading operator of duty free stores along the United States/Canada and United States/Mexico borders, one of the leading operators of duty free and retail stores in U.S. international airports and of inflight duty free shops on board international airlines, and the largest supplier of duty free merchandise to foreign diplomats in the United States and to ships engaged in international travel and trade in the northeast United States. The company sells quality brand-name merchandise such as liquor, tobacco products, fragrances and luxury items at savings of 20 to 60 percent off retail prices in the countries of its customers' destinations. -0-

              Duty Free International Inc. and Subsidiaries
                    Consolidated Statements of Earnings
              (in thousands, except per share data, Unaudited)

                    Three Months Ended        Six Months Ended
                    7/30/95    7/31/94      7/30/95     7/31/94

Net sales          $130,359   $137,241      $239,707   $220,484
Cost of sales        74,018     81,369       137,205    134,164
Gross profit         56,341     55,872       102,502     86,320
Advertising, storage and
 other operating
 income               1,141        968         2,401      2,400
                     57,482     56,840       104,903     88,720
Selling, general and
 administrative
 expenses            48,925     48,619        92,650     77,151
Operating income      8,557      8,221        12,253     11,569
Other income (expense):
 Interest income        590        701         1,242      1,972
 Interest expense    (2,167)    (2,361)       (4,351)    (4,380)
 Other, net             189       (129)          351        716
                     (1,388)    (1,789)       (2,758)    (1,692)
Earnings before
 income taxes         7,169      6,432         9,495      9,877
Income taxes          2,653      2,379         3,513      3,654
Net earnings        $ 4,516    $ 4,053       $ 5,982    $ 6,223
Earnings per share  $   .17    $   .15       $   .22    $   .23
Weighted average number
 of shares
 outstanding         27,244     27,211        27,244     27,225
-0-

              Duty Free International Inc. and Subsidiaries
                  Condensed Consolidated Balance Sheets
                              (in thousands)

                                  July 30,            Jan. 29,
                                    1995                1995
Assets
 Current assets:
 Cash and short-term investments  $ 45,632              $ 44,439
 Receivables                        34,279                31,583
 Merchandise inventories           102,890                95,112
 Other                              10,069                 9,962
Total current assets               192,870               181,096
Property & equipment, net           91,673                82,533
Excess of cost over net assets of
 subsidiaries, net                  64,075                64,682
Other intangible assets, net        27,733                25,571
Long-term investments, at cost which
 approximates market                 1,708                 9,653
Other assets, net                   21,681                23,607
                                  $399,740              $387,142

Liabilities and Stockholders' Equity
 Current liabilities:
 Accounts payable                 $ 39,390              $ 30,964
 Other                              33,804                36,136
Total current liabilities           73,194                67,100
Long-term debt                     118,462               115,798
Other liabilities                    3,070                 3,093
Total liabilities                  194,726               185,991
Total stockholders' equity         205,014               201,151
                                  $399,740              $387,142

CONTACT: Duty Free International Inc.

Director Investor Relations 

Dyan C. Cutro, 212/754-5900