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Debt-Free Mango Generates Decade-High Profits in 2021

Mango described the close of its 2021 fiscal year as its “best financial situation of the last decade,” with the Spain-based fashion retailer seeing annual sales jump 21.3 percent to 2.2 billion euros ($2.5 billion).

The company bounced back from the Covid-19 pandemic in a big way, netting profit of 67 million euros ($73.6 million), a figure which triples the 21 million euros ($23 million) generated in 2019.

In a Nutshell: The strong 2021 comes as Mango undergoes a substantial sustainability push, with the retailer doubling the percentage of sustainable garments in its total production in one year. Eighty percent of Mango’s garments are marketed under the Committed label, with the retailer previously establishing a goal to make all its garments qualified by year’s end.

Committed merchandise contains at least 30 percent sustainable fibers (such as organic cotton, recycled polyester or Tencel) or has been manufactured with more sustainable production processes.

Mango also expanded its used garment collection program to five more countries in 2021, taking back 63 metric tons of clothing, a 50 percent increase from the year prior. The program is now available in 15 countries.

In total, Mango invested 45 million euros ($49.4 million) in store refurbishing and digital transformation efforts, representing an increase of 63.6 percent compared to the previous year.

E-commerce purchases at Mango account for 42 percent of total sales, reflecting the retailer’s continued investments in the channel, including last year’s expansion of its Barcelona distribution center.

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Online’s purchase share matches that of 2020, when the channel first reached 42 percent of sales. This is a positive sign in a year where many retailers saw their e-commerce share decline from peak pandemic levels as more consumers returned to stores.

Making this number seem more impressive, Mango opened 226 net stores worldwide throughout 2021, with the company now operating 2,447 stores in 110 markets. This brick-and-mortar expansion included flagships in London, Berlin and Düsseldorf in Europe, as well as a U.S. resurgence.

Last year, Mango launched four U.S. stores to complement its two locations in Manhattan and Orlando, Fla. Two of the stores are located in New Jersey at the Menlo Park and American Dream shopping centers, while two more are located in Long Island’s Roosevelt Field complex and Miami’s Dadeland mall.

Despite Mango’s Barcelona headquarters, the brand makes most of its money overseas. International business accounts for 79 percent of total sales, while sales in Spain occupy the remaining 21 percent.

Following the integration of the Violeta plus-size brand into Mango’s existing women’s wear range, women’s fashion increased its share of total sales at the retailer to 82 percent, while men’s, kids, teens and home accounted for the remaining 18 percent.

Mango said sales for the children’s category grew nearly 60 percent over 2019 levels.

The brand’s gross margin levels rose by 0.6 basis points on a two-year basis to 58.2 percent, largely due to increased full-price sales and a reduction in discounts. Margin headwinds includes import and transport costs, with the supply chain-related concerns concentrated in the final period of the year.

Financially, Mango is on solid footing after achieving a major milestone it set in 2015—reduce net debt to zero. The retailer closed 2021 with cash surplus of 8 million euros ($8.8 million), after reducing its debt by more than 165 million euros ($181.3 million) since 2020.

This is the first time that Mango’s balance sheet has been in the black in more than 10 years, the company said.

In December 2021, Mango returned a 120 million euro ($131.8 million) loan it requested from the Instituto de Crédito Oficial (ICO) at the beginning of the pandemic. This sum is 50 percent of the 240 million euros ($263.6 million) it requested in the spring of 2020. The business never had to use the money from the loan.

Net Sales: Mango’s 2021 sales increased 21.3 percent year over year to 2.2 billion euros ($2.5 billion). Online sales grew 23 percent to reach 942 million euros (approximately $1 billion), while brick-and-mortar sales improved by 21.4 percent compared to the 2020 financial year to 1.3 billion euros ($1.4 billion) despite being closed for an average of 48 days.

In the fourth quarter, Mango surpassed pre-pandemic sales on a two-year basis. The fashion firm didn’t break out sales numbers for the quarter. 

Net Earnings: Full-year net income at the retailer was 67 million euros ($73.6 million), ahead of the 21 million euros ($23 million) generated in 2019.

Pre-tax profit was 82 million euros ($90 million), doubling the pre-pandemic figure of 41 million euros ($45 million) posted in 2019.

EBITDA rose to 423 million euros ($464.8 million), well outperforming 2020’s 193 million euros ($212 million), marking the highest figure recorded since 2014.

CEO’s Take: Toni Ruiz, CEO of Mango, emphasized in a statement that the “strength of the Mango brand” helped reinforce its market positioning and helped the company boost profitability “as we had promised.”

“The 2021 results demonstrate the positive evolution of the company in recent years and are the result of the hard work of the entire team,” Ruiz said. “Today, Mango is in an optimal position to face the future by promoting our brand and our product, remaining at the service of our customers and continuing our journey towards sustainability and operational excellence.”