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Mango Predicts Major Sales Increase

When it’s deliver-or-die, supply chains become the lifeblood of a company. To that end, the fashion industry has embraced technology to navigate today’s hyper-complicated supply chain, with myriad solutions shaping the first, middle and last mile. Call it Sourcing 2.0.

Mango, the Spanish fast-fashion chain, aims to have 7,800 stores by 2019 and double sales to $5.85 billion, according to general manager Enric Casi, as reported in WWD.

The chain had previously announced plans to launch a new label for teenage girls in the same time frame, along with a plus-sized clothing line. Sales of its men’s label, H.E. by Mango, have risen 30 percent annually since 2008, prompting ambitious plans to open 400 stores in the next five years, according to Casi.

Mango also has a strong target for 2013, according to Casi, with the goal of a 20% sales increase, similar to last year’s jump to $2.25 billion in turnover. The firm prospered despite difficult economic conditions in Spain.

They plan to open 300 stores this year – half the number opened in 2011, but similar to the number opened last year. Openings are planned for Western and Eastern Europe, as well as Angola, Zimbabwe, and Mongolia. The company will continue expanding in Chile and Peru, along with the Middle East, Southeast Asia, and the former countries of the Soviet Union.

Mango struggled to meet its turnover target in 2012 due to weakness in developed markets, according to Casi. The company has restructured its business and launched a major discounting campaign in Spain and globally. They also shifted their product mix to contain more daily wear casual and work items, away from party and event apparel.

This reflects broader changes in the global market, with consumers focusing more on durable, multi-use items. “In 2011, we changed direction,” Casi said. He also explained that store interiors were changed to encourage self-shopping and marketing focused on “big sales.”

In the interview with WWD, Casi would not discuss whether the chain had laid off workers or closed stores as a result of the deepening Spanish recession. However, the company is highly diversified, with over 84 percent of its revenue coming from foreign markets. As its expansion plans take it further afield, that share should only rise.

The company also bases all its manufacturing outside of Spain. Casi says that around 40 percent of its clothing is made in China, 20 percent is made in Morocco, and the rest is made in Eastern Europe, Turkey, and India.

Mango has previously allowed its women’s line to have corners in department stores, including struggling retailer J.C. Penney in the U.S., but Casi said that the brand is moving away from that strategy. “We don’t want any more corners. We have 900 and that’s enough.” Instead, the firm is looking to build standalone stores in major cities.

Mango hopes to move to a mix of 50 percent franchised and 50 percent corporate owned stores in five years, versus the current 60/40 blend. The company wants to increase ownership of retail space.

Casi predicts strong growth in Europe, despite the continued economic problems. He said that Mango has room to open 100 to 150 stores in France, Germany, Italy, and the U.K. Asia and the Middle East, Singapore, and Saudi Arabia are all markets that are showing strong comp store sales as well, making room for more expansion.

In China, the firm is charring out a study of Chinese women’s body shapes, so its expansion plans can more clearly establish a strong brand identify rather than simply opening a lot of stores. They currently have 149 stores in China.

South America is less of a priority in the medium term, despite delivering strong growth to Inditex and other specialty chains. Casi cites difficult customs procedures, high duties, and immature retail markets that make it difficult to site stores.

H.E. will see the biggest expansion in the next ten years, with 80 new store openings a year, bringing the line to 400 to 500 doors by 2020. Casi said H.E. differentiates itself from Cortefiel’s Springfield and Inditex’s Massimo Dutti in part by selling edgier and more fashionable clothes, and also by targeting an older 25 to 30 year old market segment.

Online sales are also predicting strong growth, with sales up 93 percent last year to $92.8 million, and a 2013 launch planned for the Middle East and Asian markets.

 

 

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