Mango Closed 2020 with a Net Loss of 207 Million due to the Pandemic
Mango closed the 2020 financial year, marked by the pandemic, with a net loss of 207.2 million euros compared to the almost 21 million profits of the previous year, according to the accounts presented by the firm in the Mercantile Registry. The coronavirus crisis had no compassion for the company in the 112 markets in which it operates and limited its activity for much of the year due to restrictions to contain contagions.
The data that clearly explains the impact of the covid is sales. Mango’s revenues fell almost 22.5%, from 2,374 million in 2019 to 1,842 million last year. A decrease that is in line with what happened in the sector in general, since the closure of businesses, teleworking and the lack of social gatherings reduced fashion purchases.
The company, in the presentation of results made on March 8, estimated the losses at 110.6 million gross. That is, before taxes, although the accounts show that the losses before taxes were 144.8 million. The difference between the 110 million announced and the 144.8 million recorded is explained by adjustments to the new accounting standards. “The group, with the adoption of IFRS 16, has reduced the consolidated result for the 2020 financial year by approximately 34,187 thousand euros as a result of the adoption of the new rules”, it is explained in the report.
In addition, company sources explain that it is usual for the results to be offered before taxes and not the net: “We always give this result so that taxation does not interfere with the reality of the business.” In its March presentation, it was compared with the same data before taxes, although the net for 2019 was also provided then.
The company spokesmen add that if the results had been presented based on the new accounting standard, the Ebitda (gross operating profit) would have ended in positive, which they consider would be something unreal in the exercise of the pandemic: ” Adjusted Ebitda (understood as the calculation of the operating profit plus the headings of the consolidated profit and loss account of “Amortization of fixed assets”) has increased by approximately 189,937 thousand euros, since operating leases are included in Ebitda, although the amortization of the rights to use the underlying assets and the financial expenses associated with the liabilities recorded”.
Regarding the number of stores, Mango reached 2,221 globally, above the 2,188 with which it closed 2019. This was achieved thanks to the expansion of franchises (it reached 1,405, adding 72 new establishments). However, in the number of its own stores, the firm lost 39 points of sale to 816.
Regarding the fight against the effects of the pandemic on the business, the company collects in the management report that at the end of the year it still had 4,022 workers with total or partial suspended employment in the countries where it has a presence, although the situation has improved dramatically so far in 2021. “The group has established a response plan with measures in all areas to minimize impacts on the financial situation.