Mango pins hopes on denim designs

CAN 'cultural denim' breathe new life into Mango? Feminine, yet androgynous, romantic yet formal, denim in shades of khaki, paprika, sand and toffee will be at the heart of the spring collection from the Spanish ready-to-wear fashion chain, said merchandising manager David Egea.

Betting on an old fabric in new shades and shapes is a brave way to try to restore the rate of sales growth. For, after 16 years of expansion, Mango has revealed that last year's sales total missed a e914.6m (£560m) target.

At e841m, turnover excluding VAT still showed 17% growth on 2000. But its store openings programme slowed to 80 against the 94 forecast.

Targets for this year have been hacked. Only 80 new stores are planned, against the 96 forecast last autumn and, at the group's headquarters on the outskirts of Barcelona, it seems ambitions are being scaled back. Financial projections are being revised and the move to a new, 600,000 square metre headquarters and logistics centre scheduled for 2004, is likely to be delayed, according to one executive.

In Britain, where Mango opened its first store five years ago, sales continue to grow impressively. With a 3,878 square metre store on London's Oxford Street - its biggest worldwide - as its flagship, the group doubled its UK presence last year to 10 outlets scattered between Glasgow and the Bluewater shopping centre in Kent. The 10 stores achieved sales net of VAT of £27.1m in 2001, up 86%, accounting for 5.2% of its store sales worldwide. But investment eased from £25m in 1999 and £30.1m in 2000 to £17.5m.

Mango UK area manager Salvador Valles said that while new openings provided the backbone of growth, sales from existing stores increased more than 10% last year. Although Mango does not disclose profit figures, Valles said the Oxford Street store and the entire British operation are 'highly profitable'.

Three more UK openings are planned during the second half of this year, he said. All of which suggests there is nothing fundamentally wrong with Mango, except it cannot grow as fast as it hoped. Founded in 1984 with a single store in Barcelona's Paseo de Gracia by the publicity-shy Andac brothers, who still control its destiny, it now has 575 stores in 62 countries. It is Spain's second-biggest textiles exporter, and one of its most successful international companies, behind Galicia-based Inditex, owner of the rival Zara, Pull & Bear and Massimo Dutti chains.

With a combination of striking retail presentation, quality collections at affordable prices and amazing logistical efficiency, the two groups have seen off US rival Gap and alarmed European competitors such as Sweden's H&M. But Inditex, floated on the Madrid stock market last May, has also begun to produce growth below expectations. The conclusion must be that, while the Spanish maestros can still teach British rivals a thing or two about fashion retailing, even they are not immune to slowing economic growth and tightening consumer spending.