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Here’s What Mango, Ross and Kering Are Doing to Finesse Their Cash Flow

Three fashion firms are securing financing to ride out the coronavirus maelstrom.

Like several of its peers, Mango is in the process of a reopening stores, dealing with governmental issues and in-store social distancing requirements. But the fashion giant is keeping an eye on the bottom line to ensure its financial house is in order.

Mango

Mango inked two new loan agreements the retailer says will “guarantee the company’s cash flow until 2023.”

One represents the Barcelona-based fashion group’s first syndicated loan, a three-year lending facility for 200 million euros ($215.9 million) that has the backing of the Instituto de Crédito Oficial. The six banks participating in the syndicate are Banco Santander, BBVA, CaixaBank, Banco Sabadell, Ibercaja and Bankia.

“With this agreement, Mango is guaranteeing financing that is stable in the long term without having to provide additional guarantees, which will allow us to increase our cash flow and dispose of a bigger margin to deal with the impact COVID-19 has had on our business,” Mango CEO Toni Ruiz said.

The other agreement is a three-year bilateral loan for 40 million euros ($43.2 million) with French bank Crédit Agricole, which also has the backing of the ICO.

Over the past three years, Mango has reduced its debt from 617 million euros ($666.1 million) to 184 million ($198.7 million), with last year’s reduction totaling 131 million ($141.4 million). Those reductions have placed Mango in a “much stronger position to deal with the current situation,” Ruiz said.

Mango to date has started the initial reopening of its store network in Europe, as well as in China. Some stores in 17 countries, such as Finland, South Korea and Indonesia, never closed. More than 600 of a total 2,188 stores are open, and online orders, representing 24 percent of total sales in 2019, remained active while brick-and-mortar operations were idle.

Ross Stores

Ross Stores Inc. has a new, unsecured 364-day credit agreement administered by Bank of America, according to a regulatory filing Wednesday with the Securities and Exchange Commission. The agreement provides the off-price retailer with the ability to borrow up to $500 million during the next 364 days. In March, like many other fashion and retail firms, the retailer had drawn down $800 million under its existing credit facility to build up cash reserves. The filing said Ross also amended certain covenants and other provisions in the existing credit facility.

Ross Stores had planned to open 100 new stores this year, but that was before the COVID-19 outbreak in the U.S. Following the outbreak and temporary store closures, the company also canceled merchandise orders to preserve its cash balances, and pushed out the time frame for when it paid vendors, factors said.

Kering Group

On Tuesday, Kering said it has issued a “dual-tranche bond” totaling 1.2 billion euros ($1.29 billion). The bond comprises a 600 million euro ($647.2 million) tranche, with a three-year maturity and 0.25 percent coupon, and a 600 million euro ($647.2 million) tranche, with an 8-year maturity and a 0.75 percent coupon.

The issues “enables Kering to diversify its sources of financing and to enhance its funding flexibility through refinancing of existing debt and extension of their average maturity,” the luxury fashion conglomerate said, adding that its long-term debt is rated “A-” with a “stable” outlook by credit ratings firm S&P.

The company last month posted first quarter results that mirrored the spread of the global pandemic, with sales starting off strong in the new fiscal year until late January and early February when the outbreak closed stores across Asia before invading Italy and beyond. Stores in Mainland China began reopening in March.

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