Adds share move in paragraph 3, analyst comment in paragraph 6 and share buyback in paragraph 6

March 11 (Reuters) - Swiss duty-free retailer Avolta AVOL.S reported annual turnover slightly below expectations on Wednesday, as a challenging market environment persisted.

The company, which runs shops at airports, on cruise liners, in seaports and other tourist locations worldwide, posted a core turnover of 13.72 billion Swiss francs ($17.63 billion) for 2025, up from 13.47 billion a year earlier, but missing analysts' forecast of 13.81 billion Swiss francs in a poll by Vara Research.

However, shares in Avolta rose 2.5% in early trading, topping Switzerland's mid-cap index .SMIM, which is down 1.3%.

"Even within a complex external environment, including the recent conflict affecting parts of the Middle East region, our scale, diversification and clear strategic direction give us confidence," Chief Executive Officer Xavier Rossinyol said in a statement.

The widening Middle East war has impacted global markets and significantly dampened investors' economic optimism amid fears the conflict will create an oil price shock, raising inflation and delaying interest rate cuts.

Vontobel analyst Matteo Lindauer said, while the risk of prolonged travel disruptions in the Middle East raised uncertainty about its full-year outlook, Avolta's geographical diversification and improving North American performance demonstrated its resilience.

The company confirmed its medium-term targets and said it will launch a new share buy-back programme of up to 225 million euros. It will propose a dividend of 1.15 Swiss francs per share for 2025, up from 1.00 Swiss francs a year earlier.

($1 = 0.7771 Swiss francs)