Mango CEO on the brand's new strategy going forward after a record-breaking FY 2022
"We have overcome adverse circumstances with a positive attitude and we have managed to beat our investment and sales record in 2022", said the CEO of Mango, Toni Ruiz, as he began presenting the company's financial results on Thursday March 9. The Spanish company was in a celebratory mood after having increased its turnover to its highest figure to date (2.69 billion euros) and having recorded a net profit of 81 million euros, four times higher than its pre-pandemic figures.
"After several long and difficult years, during which Mango had to work hard on its shops and products, and after having to take a break due to the pandemic, we feel very proud of the transformation we have made. Now we are reaping the rewards of years of hard work," acknowledged the head of the Barcelona-based company, insisting that "Mango currently has a distinctive business model that is defined by its main assets: its workers and its own high-quality designs, far superior to that of other companies in the sector."
"We have completed the most difficult task: transforming the company. We have laid the necessary foundations for further growth in the future. We want this growth to be accompanied by the creation of direct and indirect jobs," continued the CEO. The Spanish brand currently employs 14,000 people.
This transformation towards a more modern and financially stable Mango has also implied some changes in its strategy. Mango's first major change was the divestment of all its shops in Russia to its local franchisees, which has had a negative impact of 20 million euros on the company's financial accounts. "It was the most feasible solution we found to address the situation," Ruiz acknowledged. Before the war, Mango employed 800 workers in Russia, 120 in Ukraine and around 60 workers from both countries at its headquarters.
In response to rising global inflation and in line with its strategy of repositioning its garments in a more qualitative and desirable segment, similar to recent measures taken by its competitor Zara, Mango's garments are now a little more expensive.
"We have raised prices, but not in a linear fashion. This was due to the rising costs of raw materials, but mostly due to the progressive improvement of our products," the CEO explained. The brand has recently launched its premium 'Selection' collection and has focused on launching strategic collaborations with well-known designers or influencers such as Camille Charrière and Simon Miller.
These changes, however, do not seem to have affected Mango's financial statements, but quite the opposite. "We have closed a really good year. We ended the year with a net financial debt of 82 million euros, one of the healthiest in the sector," said the company's financial director, Margarita Salvans.
Online sales represent 36% of Mango's record-breaking turnover. However, although this 960 million in online sales is higher than the 942 million recorded in the previous year, it has not yet reached the 1 billion online sales target that Mango had set for 2021.
"Circumstances have changed, but turnover has continued to increase. The online channel accounted for 42% of our sales, but we still have a market share higher than the Spanish average of 21%," argued César de Vicente, the company's chief retail officer. Mango intends to take its e-commerce to 20 new markets in the first half of 2023, especially to Africa and to countries such as Brazil, where it has just inked a deal with local online retailer Dafiti.
International expansion and significant investments
Contrary to what might have been expected given the e-commerce boom during the Covid-19 pandemic, one of Mango's main priorities has been to develop its physical retail network. "In 2022, the world returned to normal and we wanted to capitalise on this by investing in our shops," said the company's CEO, revealing that 119 more shops were opened in 2022 than in 2021. Mango currently operates a network of 2,566 points of sale across 115 markets in five continents. In 2022, the brand added Cameroon and Morocco to its list of countries in which it has a physical presence.
"The past year saw the company expand significantly," said Ruiz, highlighting the company's milestone store opening on New York's Fifth Avenue, the refurbishment of its store on Paris' Boulevard Haussmann and the signing of key agreements with Fox, for its Canadian expansion, and Myntra, for its deployment in India. "This year we have celebrated the 30th anniversary of Mango's internationalisation, which began with a first store opening in Portugal. In 2023, we are going to accelerate the pace of store openings and refurbishments. It is clear that we believe in the importance of physical shops as they are where we come into contact with our customers," said de Vicente, insisting on the importance of expanding Mango's business in the United States, which should soon account for 100 million euros in sales.
"We are accompanying our growth with significant investments in technology, logistics, facilities and shops," said Salvans about Mango's latest projects. The Barcelona-based company, owned by Isak Andic, invested 107 million euros throughout the year, doubling the 45 million euros it invested the previous year. According to Mango, this is the first time since 2014 that investments have exceeded 60 million euros.
"We have to continue to invest. We want to keep expanding and growing considerably. Investments will be very important in the next few years", said Ruiz, explaining that a portion of funds are being used to complete the expansion of its distribution centre in Liçà d'Amunt, in Barcelona, with the aim of "jointly managing all the stock operations of the physical and online shops." In addition to this latest project, which will be launched within the first six months of the year, the Mango Campus will also be built. The new headquarters will require an investment of 42 million euros and will house 2,200 workers.
"We have such a spectacular value proposition that we are convinced of the company's expansion potential. We want to make a qualitative leap in many different places," concluded the CEO.
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