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Mavi Saw Net Profits Jump 33 Percent Last Year

Turkish jeans and apparel brand Mavi said it saw double-digit growth across all product categories and channels in Turkey and abroad in 2019, with a strong contribution from a burgeoning e-commerce business.

In a Nutshell: “Mavi’s exceptional brand awareness levels, our uncompromising customer focus and approach to quality from material innovation to production to after-sales services enabled us to achieve significant double-digit revenue and profit growth while attracting more new customers than ever in 2019,” CEO Cüneyt Yavuz said.

Mavi in 2019 continued to refocus its operations towards sustainable practices, due in large part to a re-alignment all departments and processes, including procurement and supply chain. The brand also launched its environmentally friendly All Blue collection, which was “well-received by customers around the globe,” Mavi said. The push for efficient procurement, along with productivity and stock and cash flow management, resulted in lower debt levels for the firm in 2019.

The company said its customer-focused strategy and high brand awareness attracted 1.2 million new customers in the full year, with 65 percent of them in the millennial and Gen Z younger-than-35 demographics. The  “Mavi Black Pro” men’s and “Mavi Icon” women’s collections were especially popular, Mavi said, noting it sells about 10 million pairs of jeans a year.

The company plans to add net 15 new stores and expand 10 existing locations in 2020. adding to the 14 net new store openings and 11 store expansions last year. Mavi is available in 35 countries through 440 stores and more than 5,500 sales points.

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Net Sales:  For the year ended Jan. 31, 2020, the company said consolidated revenues rose 22 percent to 2.86 billion Turkish lira ($451.9 million). Earnings before interest, taxes, depreciation and amortization (EBITDA) grew by 9 percent to 401 million Turkish lira ($63.4 million). Like-for-like sales in Turkey rose 20.9 percent, with revenues up 23 percent to 2.37 billion Turkish lira ($374.5 million).

E-commerce channels saw strong growth, rising 86 percent in consolidated revenues and representing 5.1 percent of Mavi’s total sales.

Earnings: Net profits for the year jumped 33 percent to 134 million Turkish lira ($21.2 million). That’s on top of the 12 percent gain in net profits a year ago.

Mavi said it is set to maintain its “solid financials and profitable growth ahead” with a revenue growth target rate of 23 percent, an EBITDA margin of 14 percent and a net cash surplus. The company projected like-for-like sales to grow at a targeted 18 percent for the full year.

CEO’s Take: “While reaching our ambitious targets and maintaining our financial discipline, we were particularly pleased to see an increase in both global transaction frequency and volume while also observing an encouraging uptick in customer traffic in our stores in Turkey, particularly in the last quarter of the year,” Yavuz said.