Benetton's cost reduction pays off

Benetton Group stated its first half 2010 results were positive, reaching €891 million (+1% over the comparative half year). The company said its product mix contributed to this improvement, with a predominance of higher unit value categories.

Group brands achieved good results in the half year, with growth of Sisley and the 012 and Sisley Young brands, while the UCB brand substantially maintained its position. Geographically, in established markets, the slow-down in Greece and Spain was offset by a solid performance in Italy. Regarding emerging markets, whose proportion of total sales increased to 13%, the strong growth achieved in Mexico (+60% currency neutral) and in India is of special note.

Gross operating profit of €425 million (47.7% of net revenues) was up (+€24 million) compared with €401 million (45.5%) in the comparative half year, due to efficiencies achieved in manufacturing and sourcing.

Cost reduction actions launched during 2009 meant general expenses for the first six months of 2010 were maintained at the same level as in the comparative half year, with a slight increase in advertising investments.

As a result, operating profit was €63 million, up compared with €43 million in the corresponding period of 2009, with a percentage to revenues of 7.1%, compared with the previous 4.9%.

The cost reduction actions, introduced last year, increased efficiency in the production area. The 2nd half of 2010 will see the relaunch an innovative spaces in the larger Flagship Stores.

All company efforts are focused on creating the right conditions for the resumption of growth, also with the support offered to the Asian markets, accompanied by an unchanged and continuing commitment to greater efficiency.

The company did state new orders taken for the Fall/Winter collection demonstrate continuing weakness in the economies of markets historically of greater relevance to the Group.

Image: Benetton




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