The fashion group Mango returned to profit last year, after a 2020 of heavy losses due to the pandemic. The net profit amounted to 67 million euros, after the red numbers of 207 million from the previous year, and triple what was earned in 2019, according to what the company owned by businessman Isak Andic reported on Thursday. With this result, the best since 2014, the firm closes the parenthesis of 2020, a year marked by the pandemic, although it remains to be seen how the situation will evolve in Russia, where it has temporarily suspended its activities due to the war in Ukraine.
The Russian market is relevant for Mango. It is among the top five in turnover, and contributes 8% to the result, according to company data, which is pending the evolution of events and the workforce in both Russia and Ukraine. The textile chain has a total of 800 employees and 120 stores in Russia, of which 65 are its own and the rest are franchises. In Ukraine it has 14 stores that are also closed. Mango’s decision coincides with that of other fashion companies, such as Inditex and H&M, and other sectors, which have also paralyzed their operations.
The improvement in Mango’s profit in 2021 occurs after reaching a turnover of 2,234 million euros, 21.3% more than the 1,842 million registered in 2020. This is close to what was registered in 2019, with sales reaching an absolute record ( 2,374 million). As explained in a statement by the CEO, Toni Ruiz, “the results of 2021 demonstrate the good evolution of the company in recent years and are the result of the work of the entire team.”
The company highlights that in the first four months of 2021 the evolution of sales was marked by the restrictions derived from the pandemic in some markets as relevant to the company as France, Germany and the United Kingdom. The sale on-line had a growth of 23%, and now accounts for 42% of turnover. The digital channel covers a total of 85 markets. Regarding physical stores, despite the fact that they were closed for an average of 48 days in 2021, their sales improved by 21.4% compared to the 2020 financial year.
Spain, 21% of the total
The net profit for 2021 is the best since 2014, when it earned 77.9 million euros. As of 2016, the company entered into losses, a path of red numbers from which it managed to get out in 2019 and then fall back again in 2020 due to the blow of the pandemic.
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Regarding the distribution of total turnover by geographical area, the group’s international activity amounted to 79% of the total and the Spanish market represented 21%. At the end of 2021, Mango was present in more than 110 markets around the world. By lines of business, Woman, after the integration of Violeta, increased its weight to 82%, while Man, Kids, Teen and Home accounted for the remaining 18%. The behavior of Kids stands out, whose sales grew by almost 60% compared to 2019. “The year 2021 has once again been full of challenges and uncertainty, but we have taken advantage of the strength of the Mango brand to strengthen our position in the market without giving up increase our profitability, as we had promised”, says Ruiz.
Objective: not pass on inflation
The impact of the global crisis in the supply chain was concentrated in the final stretch of the year. The objective is to try not to affect the persistent inflation in the sale prices.
Regarding the debt, the company assures that it has been reduced to zero, after reducing it by more than 165 million compared to 2020. This situation has not occurred in Mango’s balance sheet for more than a decade. Last December, Mango returned to the Official Credit Institute (ICO) the credit line of 120 million requested at the start of the pandemic. This amount is 50% of the 240 million that were requested in the spring of 2020.
Mango, which has been the subject of information several times about its possible IPO, does not currently have any plans on the table in this regard. With its 3% market share in Spain, the company is also convinced that it has room to grow a lot without making purchases.