Mango and J.C. Penney are parting ways.
The Dallas-based department store chain on Wednesday confirmed that the Spanish retail giant will close all 450 MNG by Mango shops-in-shop in J.C. Penney stores by February.
“We have appreciated working with Mango over the years to bring high quality, affordable European fast fashion to J.C. Penney customers,” said Siiri Dougherty, senior vice president and senior general merchandise manager of J.C. Penney. “Adding MNG by Mango to our portfolio of exclusive contemporary brands reinforced J.C. Penney as a style destination for fashion apparel and accessories. We plan to build on that momentum next spring as we debut a new Millennial brand, Belle + Sky, to more markets in 2016.”
When the Mango and J.C. Penney partnership was announced in 2009, both retailers had high hopes for the concept. Mango’s five-year agreement with Penney’s ends in February. The Spanish retailer declined to renew the deal, having reportedly realized only a 0.5 percent sales bump from the Penney’s MNG by Mango shops.
Mango is the second high-profile brand to exit J.C. Penney. Joe Fresh, a Canadian label, shuttered its shops-in-shop at J.C. Penney earlier this year.
Closing the Penney’s shops-in-shop will leave Mango with only seven points of sale in the U.S. Mango is reportedly looking for new partners that could help bolster its presence in the U.S. market. The Spanish retailer has been intrepid in entering foreign markets, racking up a presence in 100 countries.
“Every time we bring Mango to a new international market, it has driven immediate, strong demand, and we have only begun to capitalize on the great desire for Mango in the U.S.,” said Enric Casi, Mango’s chief executive officer at the time of the launch. “J.C. Penney is the perfect match for us to take advantage of the opportunity we see for the MNG by Mango brand in this market.”
“Fast fashion for the young, modern woman is our highest-potential business opportunity,” Myron “Mike” Ullman 3rd, the former ceo of J.C. Penney, said at the time.
Ullman as recently as February cited MNG by Mango shops as a key differentiator for Penney’s stores.
Yet, as far back as June 2013, Casi indicated that the retailer may be souring on shops-in-shop and corners in department stores. “We don’t want anymore corners,” Casi said. “We have 900 and that’s enough. Our new policy is to open stand-alones in key urban centers.”
Mango’s profits in 2014 fell 11 percent, in part, due to international investments.
J.C. Penney on Wednesday disclosed that comp-store sales for the third quarter increased 6.4 percent, an improvement over earlier estimates, and that gross margin and earnings exceeded expectations. The retailer will report its full third-quarter results on Friday. Penney’s also revealed on Wednesday that it had settled a class-action lawsuit related to false advertising for $50 million. The lawsuit, which was filed in 2012, involved California customers who purchased certain J.C. Penney private or exclusive brands in which there was a price comparison.
After gaining 6 percent Wednesday morning, Penney’s stock in the afternoon declined 17 cents, or 1.96 percent, to $8.51 on the New York Stock Exchange.