Mango is ready to party.
It’s part of the plan conceived by chief executive officer Toni Ruiz, who settled into the seat just over two years ago, after joining the company in 2015 in the head finance role. He came to the fashion world after years in the home improvement space, and maintains a down-to-earth air; he’s the kind of guy who leaves his LinkedIn DMs open and gives out his personal email at conferences.
After a pandemic pivot back to basics, Mango is pushing all things party girl this season. A capsule with French influencer Camille Charrière anchors the offering of on-trend “naked dressing” and Y2K-influenced bias cut skirts and slipdresses. The brand threw a splashy party in Paris with Charrière, Erin Wasson and a sparkling croquembouche to kick off the collection.
Ruiz believes it’s key to the brand’s positioning, as Mango looks to improve quality and elevate its image. While much of the brand’s business is done in Europe and India, Ruiz has his sights set on the U.S. The company opened its Madison Avenue flagship last May with a new design concept and will open 10 stores in the U.S. by the end of the year, before rolling out a planned 40 stores across the Sunbelt states in the next two years. In Ruiz’s vision, the U.S. will be one of the brand’s top five markets by 2024.
During his short tenure Ruiz has made ambitious plays with new teen and home lines and he wants a bigger piece of the European pie, too. “Our market share is not as big as what we think we can do,” he said, citing only a 3 percent market share in its home country of Spain, where rival Inditex is by far the bigger player. “So imagine the opportunities we have.”
He hopes the expansion plans will offset the losses from closing Mango’s Russian business, which before the Ukraine invasion held a top five slot and accounted for 8 percent of global profit. The company is looking to sell the remainder of the business there to a franchisee, but has not yet reached a deal.
Partywear aside, Ruiz is aware the macroeconomic music is increasingly discordant, and he’s realistic about the challenges the company faces. In addition to Russian woes, Ruiz cited cost increases in raw materials, logistics, rents and wages as factors expected to take a toll on this year’s bottom line. He also raised concerns about the weak euro affecting the company’s purchasing power, and a competitive labor market making retaining customer-facing talent “a true challenge.”
Legislation, too, may affect the business, as laws come into effect in Spain and the EU that will soon seek to make some of the 139 million garments Mango produces a year traceable and more sustainable. Unlike other fast fashion brands, Mango does not have any plans to launch resale or rental platforms, Ruiz said. Still, he’s heavily pushing sustainability strategy, and recently refinanced the company’s debt to reduce costs by linking it to the environmental, social and governmental goals, as well as invested in Recovero, a waste fabric repurposing start-up.
“It’s a question of how to continue this legacy. I’m very worried about how this positioning, this DNA will continue in the future,” he said. “But I can say that I see the future of Mango with clarity.”
Here, Ruiz discuss the challenges ahead, the U.S. business and more.
WWD: How are you handling these multiple economic challenges as you are in the middle of the U.S. expansion?
Toni Ruiz: Inflation is a very, very important subject not only for this year, but also for the next, perhaps, three years. We have to manage this, and we think the best way to manage this is to be on the offensive. I mean the offensive in terms of offer, offensive in terms of product, offensive in terms of positioning, and offensive in terms of expansion. There are a lot of [retail storefront] locations free because of COVID[-19], so we think that, because we are strong financially, it’s time to be on the offensive. We know that consumption and fashion consumption will be reduced, but it is time to try to have a higher market share.
We have to maintain and to improve our positioning, because you know very well that the fashion industry has a lot of competition. It’s a discretional category, so when there is a decrease of consumption, fashion is always losing. I’m not sure if it’s a question of size; I think it’s a question of confidence, it’s a question of if the customers know and appreciate our offer.
WWD: Anticipating some decrease in fashion demand, do you see Mango raising prices as some other brands have announced?
T.R.: During the pandemic we had to adapt our product, our collection, our offer [when before] we were well known for occasion and event wear. It’s about parties. So we think that we can recuperate, and we can increase our offer in these [categories]. We see that as a huge opportunity. We haven’t done a linear increase of prices. But as I mentioned, we have done a very good job in order to recuperate a lot of occasion wear that generally speaking are with higher prices than average. So we’ll have increased some prices, because in our new collection in general the average price is higher. This allows us to protect our margins and to continue to to maintain our profitability.
A very important KPI [key performance indicator] when you think [whether] our collection is good or not good is how many items or how many discounts you do in our collection. I can say that in general we are reducing our promotions. This means that we are doing better. It is also true that because of the Russian conflict, we have to manage more stock than previous years, but it is something that we can manage, we are dealing with the problem and we are able to absorb.
WWD: What is the biggest challenge to balance all of these issues as a global company?
T.R.: Another important issue today is geopolitical [strategy]. We are a very international company in our sector, present in more than 110 countries, and sometimes it’s not very easy to manage the situation. For example, how will the conflict evolve between China and the U.S.? This is why we are trying to have more flexibility than ever. Some years ago it was a question of cost, and now I think it’s a mix — you have to balance the trade-off between cost and flexibility because the political situation can change from one day to the other, as we have seen. During the last 30 years globalization has been very important and we have grown at the same time as globalization increased. Now, it’s not very easy for companies like us that are very international to change our sourcing that has been built for decades. It’s a big issue, and we are trying to understand where can we find different solutions for our sourcing. Every week we have a special investment committee trying to analyze what will be the best opportunities or not. So there is huge, huge work on that.
Nowadays, volatility and uncertainty are greater than ever. We have to try to understand with a long term vision which things are changing, which things will rest, and which things will evolve. In the end, nobody knows nothing — I don’t know if no one knows nothing, but when the experts are speaking about issues like dollar exchange rate or inflation, [and] everyone is saying different things. So it’s time to have different scenarios, planning, positioning. Expansion close to the clients will be important, for example. We are very confident because we are very adaptable, very agile. During COVID[-19] we demonstrated that we can manage these uncertain situations.
WWD: How are you planning for the future changes in European Union law that will govern fashion companies and textiles?
T.R.: In terms of legislation, the agenda 2030 is something that will change our industry and we have to work on that. There are some very important aspects related to eco design and sustainability. So we are working on eco design. The second one is about the digital passport, which is something I think will arrive sooner. And the other is, we’ll have to work together also with legislation to have a clearer understanding of what does it mean, “sustainability?” Because nowadays there is no standard. So every company is trying to, not only to understand, but also to present to our clients. This will help our customers understand what does it mean to be sustainable, which companies are more sustainable than the others. But sustainability is a very important point for us, we have an ambitious target, speaking about reducing emissions, speaking about the use of recyclable fibers. We want to publish for 2024 not only tier one, tier two, but also the third, fourth [tier emissions]. It’s a journey. We have a lot of work to do.
WWD: Do you have a specific definition that you support for “sustainability?”
T.R.: No, I would have to work on that with the sector and with the other companies. I think that, for example, eco-design, circularity, raw materials, sustainable fibers, I think this is very important. Speaking about sustainability, I think it’s time to work together.
WWD: The EU circularity will take into consideration the life cycle assessment [LCA] that companies will be responsible for their products beyond sales. Are you working on ways to track that?
T.R.: For example, in Spain, at the end of 2024, we will be responsible for recycling all the materials, all the garments we produce. This is something that is arriving in two years, so we will responsible for that. It’s time to work very hard, and very quickly, because it’s something that’s not very easy, and it’s a lot of work to do that. This means that we have to understand what we are producing so this is why we insist on our traceability and on our public publishing of all this information, because it’s the first step.
WWD: What is the system for recycling the textiles after they are collected?
T.R.: There’s a group of companies that we are working with to create systems. Not to recycle, to pick up the clothes. But we don’t know the next step because the legislation has not been applied. Everything is so new. I imagine, at the end of the day, brands will pay for the garments they produce in order to organize all the infrastructure. We are working with people in the industry, people from other brands, trying to understand the best way. It’s also not easy for governments, so I think it’s something that we have to build together — the public is responsible with private companies in order to achieve a better result.
WWD: Mango had a large increase in volume of sales last year. Do you think about holding steady, decreasing volume or “degrowth” in order to not have to collect all the items at the end of the cycle?
T.R.: No. There are a lot of people speaking about reducing consumption, and this is something that I think for the whole planet, it’s very important. But at the end of the day, at Mango, we see a lot of opportunities. For sure we have to work on all the things related with eco design, so that our garments must have a second life cycle. This is very important, and you have to produce and design in the best way for having these. This circularity will arrive, I think, very soon. But when we speak about [Mango], we see a lot of opportunities. We think that our turnover will increase in the next few years because we have been very successful in the U.S. with our expansion there, and in the whole of Europe. So for sure, we think that consumption will be reduced, but our market share is so small that we will continue to grow.
WWD: You will be reporting your tier three and tier four suppliers. When you’re working with these suppliers, are you investing in them or helping them invest to clean and green their supply chains?
T.R.: One thing that we have learned during the COVID[-19] period is that we have to work together with our suppliers as a partner. We have a very important program with some partners, because we think that in terms of sustainability, in terms of eco design, we need to work together. So we invest a lot of time, not only in process, but also in training. This is why we have aligned with fewer partners, fewer suppliers and are trying to work together because sustainability and circularity has to be a must.
In our DNA, quality is very important. If the quality is not as good as we think, we are lost. Because if you are not working on quality, you will lose your position and you will lose your clients. We have to reinforce our positioning and the offer. This is the only way we think that we will not only survive, but be successful in the future.