Mango sees sales drop 22.4% but softens impact of Covid-19 thanks to digital
Mango is clinging on to the lifesaver represented by its online channel as it faces up to the pandemic. Spanish fashion company Mango / MNG Holding closed fiscal 2020 with total revenues of 1.84 billion euros, a 22.4% decline compared to the record figure of 2.37 billion reported by the business in the previous year. However, digital sales presented a twinkle of hope, growing 36% to 766 million euros and accounting for 42% of the Barcelona-based company's total annual revenues.
As for the retailer's EBITDA, it came to 193 million euros, just one point behind the figure reported in the previous year. However, this result reflects the application of the IFRS-16 reporting standard in the first year that the company has implemented it. Without the effect of the standard, the figure would have been 21 million euros. 2020 was also the fifth consecutive year in which the company's net bank debt decreased, reducing 20% year over year, from 194 million to 156 million euros.
In its annual results release, published on Monday, March 8, Mango divided its fiscal year into four different phases. During the first, which corresponds to the months before the pandemic, the company's sales grew 8%. This positive progress was halted during the first wave, between March and June, a period when almost all of the brand's stores were fully or partially closed and the online channel represented up to 93% of sales made by the company, which explained that this digital strength "limit[ed] the fall in total income to 50%."
With the gradual reopening of its store network, Mango experienced a "recovery period," so that in October its sales "were only 6% lower than those of the previous year." Finally, the second wave of the pandemic, which affected the last two months of the year, led to the return of restrictions and store closures, while the company's online channel saw "major increases" in revenues during its Black Friday and Holiday campaigns.
42% of revenue already comes from digital
"We have experienced an absolutely exceptional and unpredictable year for everybody," said Mango CEO Toni Ruiz in the company's results release. "Thanks to the major commitment Mango has made to its online channel over the last 20 years, we have succeeded in it representing 42% of our total turnover in 2020 [compared to 24% in the previous year], which is an extraordinary figure in our sector and a huge competitive advantage for our company," he explained optimistically.
Despite the decline of 43% in its brick-and-mortar channel – related to the various restrictions imposed by the health authorities in different countries, ranging from store closures to opening time and capacity limits – the growth of 36% in the company's online sales, which totaled 766 million euros, provided the retailer's balance sheet with a valuable line of oxygen. There was significant progress in the 85 countries where Mango has online operations, especially in some of its main markets, such as France, Italy and Portugal, where it posted growth "close to or above 100%."
Last autumn, Mango celebrated the 20th anniversary of the launch of its e-commerce channel, recording a year-over-year increase of 25% in total visits, which came to 750 million. In 2021, the company's objective is to achieve 1 billion euros in revenues in the channel. And Mango is taking on this challenge through a range of projects, such as the hyper-personalization of the online shopping experience, the use of AI technology to improve after-sales service, and the inclusion of franchises in omnichannel initiatives.
"We should be satisfied with the work we have done during this very complicated year. We have achieved reasonable turnover levels bearing in mind the context and we have accelerated the digital transformation of the company even further," concluded Ruiz. "I would like to emphasise the huge effort made by the best team we could wish to have. Thanks to all our employees, the financial and organisational structure of the company remains very solid."
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