Benetton sales take a hit in India, losses mount to Rs 49 crore

Italian fashion retailer Benetton continues to struggle in the Indian market as it sales revenue took a hit falling 5 percent to Rs 699 crore (approx $109.2 million) with losses widening to Rs 49 crore (approx $7.7 million) for the financial year ended March 2017.

Last fiscal Benetton’s India profits fell a sharp 79% to Rs 2.3 crore (approx $340,000) with sales rising by just 2.2% to Rs 735.3 crore (approx $114 million), data from the Registrar of Companies (RoC) shows.
The clothing group has struggled to reposition itself in India’s challenging fashion market post the arrival of international brands like H&M, Zara, Mango, and Forever 21 among many others. The deterioration in sales and widening of losses has forced the company to shut down as many as 119 stores in India.
The Benetton group has been struggling in the international markets as well amidst slowdown and economic stagnation in Europe.
In 2016, the Italian brand had a global turnover of 1.376 billion euros compared to 1.504 a year earlier, down 8.5%. Benetton Group net loss had also doubled from 46 million in 2015 to 81 million euros a year later.
Benetton however has attributed its India losses to demonetisation and a fire that broke out at its partner warehouse.
"The revenue loss is mainly due to demonetisation, especially at a time when we are in consolidation phase and topline was not being driven by expansion," Sandeep Chugh, CEO at Benetton India told the Economic Times.
“Provisioning of the fire, which destroyed inventory worth millions, contributed to 70-75% of the loss, Chugh further said. “The balance was largely on account of a consolidation and strategizing exercise, that was planned to be a capital intensive project for us to be future ready," he added.
Currently, Benetton operates a wholesale business in India that supplies products to be sold through a network of franchisee outlets and has 718 stores across the country.

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