Mango invests 230 million euros in logistics centre as CEO hails turnaround
Mango’s future is being written, about 30 km from Barcelona. More precisely, in the municipality of Lliçà d'Amunt, where the company founded by Isak Andic has invested more than 230 million euros to build a new logistics facility. It came into operation during the summer, and on Wednesday 27 November, members of the media were invited to a presentation from management. The launch came alongside a good set of news. “With only five weeks to go until the end of the year, I can reveal that sales have done very well in the year to date. We hope to achieve positive results this year,” said Toni Ruiz, CEO, with a huge smile.
The chief executive added that Black Friday is “the most important week of the year in terms of sales, in addition to being the season when we sell the most, with a boost from the Christmas campaign.” The company will release its full year results for the period ending 30 December in a few weeks, but the signs are encouraging. “We have had several difficult years, but we have undergone a massive transformation,” said the executive, waiting until the end of the year to lift the veil on the company’s progress.
The logistics centre of the future
Work on the new distribution centre began in April 2011. It took Mango eight years to build the 190,000 sq mt facility, which serves the 2,100 stores operated by Mango in over 110 countries. It also triples the brand’s logistics capabilities. “Lliçà is a key investment because it will support the company's growth in the coming years and ensure we are able to react much faster to the needs of our customers. This is the result of many years of work,” said the CEO, proud of having what he described as one of the largest and most modern distribution centres in Europe.
At full capacity, the facility can handle up to 75,000 garments per hour and about 600,000 per day. Compared to Mango’s previous distribution centres, this is an impressive threefold increase. The goal is to help the retailer react as quickly and efficiently as possible to customer needs. The space houses 600 workers and about 400 high-tech automated machines, allowing orders to adapt to the requests of the company’s stores, franchises and online channels. And the centre could soon include a platform for customer e-commerce orders.
Divided into several areas, the warehouse has a special 25 metres tall area where garments are received and shipped on hangers. A part of the facility has enough storage for up to 7 million garments, while another area distributes the items according to the needs of stores to reduce lead times. And there’s a folding area with four fully-automated double-storey warehouses. At 35 metres, the warehouses can store more than 20 million items in 800,000 boxes. These are then moved to another space with capacity for two million garments, where they are classified and shipped to stores at the fast rate of 45,000 garments per hour. The whole operation will handle the more than 130 million garments Mango stores receive each year.
According to the company, the logistics centre will pave the way for an online boost. Currently, online sales account for 20% of Mango’s revenue, and the brand is hoping to increase the share to 30% next year.
The Lliçà d'Amunt premises also supply an e-commerce site located near Mango’s headquarters in Palau-solità i Plegamans in Barcelona, which handles all online orders except for those in Mexico, China, Germany and the United States, where the company operates smaller warehouses.
35 million euros and 90,000 sq mts of expansion by 2023
In addition to an initial investment, Mango is planning to plough a further 35 million euros into the second phase of the project to add a new east side wing. “This will be a B2B centre dedicated to stores and our warehouses. And when we expand the premises in the coming years, the plan is to build a space for e-commerce orders,” said Antonio Pascual Barroso, director of logistics and supply chain.
Enhancing Mango’s customisation capabilities has been part of the plan since the project’s conception, with a 90,000 sq mt facility planned for 2023. The fast-fashion brand said this will continue to support the growth of its e-commerce business and provide greater capacity to its infrastructure.
Founded in 1984 in Barcelona, Mango has a distribution network of 800,000 sq mts across 110 countries. Last year it reported a 1.8% increase in sales to a staggering 2.23 billion euros, however the business remained in the red for the third consecutive year with a loss of 35 million euros. A return to profitability would confirm the company is finally on the right path after years of trying to achieve a turnaround. In addition to the opening of a new logistics centre, the turnaround strategy has seen Mango issue debt for the first time in its history. It has been a rather busy year for Toni Ruiz, who is hoping to end 2019 with a bang.
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