Mango continues to grow, revenues reach 2.23 billion euros in 2018
today Jun 12, 2019
After three consecutive years of falling sales, Mango has finally returned to growth. Ahead of the release of its annual results, taking place in the upcoming month of August, the Spanish womenswear company has announced a 1.8% increase in revenue to 2.23 billion euros ($2.5bn, £1.98bn). Meanwhile, the company’s EBITDA has grown to 135 million euros ($152m, £120m), up 17% on the previous year and representing a significant 75% improvement on the 2016 result, when EBITDA reached 77 million euros.
The improving performance is the consequence of a restructuring programme launched by the fashion chain six years ago. The plan has seen the brand invest an estimated 1 billion euros, Toni Ruiz, the company’s general manager, told members of the press in October last year. However, the man who was finance director of Mango for three years, kept the company’s bottom line under wraps. The business, founded by Isak Andic, blamed the impact of its transformation programme when it fell into the red in 2016, as losses reached 61 million euros. This dynamic continued in 2017, although Mango was able to narrow its losses to 33 million euros. While the executive has insisted the business is working hard to improve its profitability, onlookers will have to wait until next August to confirm whether the measures are bearing fruit.
Growth boosted by the online channel
Growing the e-commerce business and driving operational efficiencies are key parts of Mango’s transformation process. With an online presence in 80 countries, Mango said 20% of revenues came from online sales last year, meeting a goal that had been originally set for 2020. The general manager’s next challenge will be to bring that figure to 30% over the next few years. There seems to be momentum to drive this growth: while online revenues increased by 15% in 2017, last year saw sales from the online channel rise by 30%
As for its logistic targets, the company claims to have opened seven warehouses around the world, and a further site is set to join the portfolio in Mexico soon. Additionally, the general manager said that the new distribution centre at Lliçà d'Amunt in Barcelona is now fully operational. Mango also has a warehouse dedicated to its e-commerce operations, which is run independently.
“We want to gradually start using our chain of stores as distribution points. The pure players would love to have a bricks-and-mortar presence like ours. Stores allow you to have a clear and powerful positioning,” Toni Ruiz told Spanish newspaper El Economista.
A digital transformation fit for survival
Meanwhile, digital transformation continues to be a pending issue for the company. Despite launching a loyalty programme, the technological implementation of the RFID system is lagging behind that of its rivals. Without going any further, Inditex, another Spanish company, wants its radio-frequency identification system to be active for all its brands and globally by 2020. Trying to move in the same direction, Mango has begun to use the system in four stores in Barcelona, and the concept will arrive in Madrid in autumn.
And in other news, Mango's general manager also referred to recent speculation about a possible initial public offering (IPO). He said Mango is not for sale and that the firm’s founder Isak Andic will continue to be its sole owner. Less emphatically, he also talked about a possible debt issue as an alternative to raise funds. It would be the fashion company’s first foray into the debt market. In recent times, Mango has managed to significantly reduce its net debt from 617 million euros in 2017 to 315 million euros ($356m, £280m) in the last financial year.
Mango has a total of 15,000 employees and trades from 800,000 square metres worldwide. At the end of the last financial year, it had a chain of 2,190 stores across 110 countries. The expansion plans of the Barcelona-headquartered company include accelerating its growth in the United States and in China, where it has recently signed an omni-channel agreement with the Hangzhou Jingzhe Clothing Group.
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