Benetton finishes 2013 in the red
Hit by the steep recession in Italy, its largest market, Benetton finished fiscal year 2013 in the red. The Board of Directors of the fashion group, based in Ponzano Veneto outside of Venice, approved the company’s 2013 balance sheet on Tuesday, April 8, but without disclosing its results. The company decided to release only a few details via an interview with CEO Biagio Chiarolanza in the Italian daily Repubblica.
After ending in the red in 2002 as well, the business, founded by the Benetton family 48 years ago, has now recorded the second loss in its history, stated the newspaper without revealing the extent of the loss. According to the local press, the company’s operating results (EBIT) may have experienced a loss of 64 million euros.
The group also saw sales drop by 10% compared with its 2012 revenues of 1.82 billion euros. “2013 was a transition year, so we will see in 2014 if the highly positive signs shown in the past six months are borne out,” Biagio Chiarolanza summed up.
During the last quarter of 2013 and the first three months of 2014, a sample of 131 stores in the most important countries showed the following results: store entry rates: (walk-ins +10%); conversion rate per visit: + 7%; sales at constant scope: + 17.7%
The group’s restructuring process, begun several months ago, partly explains the negative results, given the closing of the group’s less important brands, Benetton’s withdrawal from 60 of its previous 120 markets, and the reduction in the number of stores.
Today, the European market represents 75% of the group’s total turnover, with Italy accounting for 39%. "Fiscal year 2013 is the result of a complex dynamic, combining the beginning of our relaunch and store closings, as well as our withdrawal from certain markets, leading to a logical reduction in volume," said the CEO.
At the same time, the group's debt fell from 640 million euros in 2012 to less than 300 million in 2013, while the Benetton Group plans to invest "approximately 100 million euros this year."
The three-year program adopted last November calls for dividing the group into three companies (real estate, production and sales), as well as focusing on the two historic brands: United Colors and Sisley, targeting two different market segments. Much work has been done, particularly on the product lines, by the current creative director of United Colors of Benetton, Valentina Soster. At Benetton for 12 years, she succeeded You Nguyen, who left the group last year.
Next week in Milan the all-new Benetton store concept will be unveiled, devoting more space to sweaters and knitwear in all colors, as well as to accessories.
The group abandoned the giant megastore format, closing its stores in Tokyo and Rome, to focus more on smaller-sized boutiques. United Colors of Benetton is currently distributed through 6,000 franchise-operated stores and 600 of the company’s own stores.
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