MILAN — Benetton Group said Thursday it will initiate a three-year plan to restructure its operations hinging on a focus on its brands in an effort to improve profitability.
The key objective is also to maintain revenues “substantially unchanged” by the end of the third year, “by offsetting exits from no longer strategic countries with like-for-like sales growth,” said the company.
The Italian group will create and differentiate three new areas: managing brands, manufacturing and real estate management. All three entities will be directly controlled by Edizione S.r.l., the holding of the Benetton family.
“From the outset, we laid out a strategy for rethinking our business based on discontinuity and renewal, of course without forgetting our rich history. Today we see certain early signs that the strategy is starting to pay off, even if we are still only at the beginning of the journey and the market environment remains uncertain,” said Alessandro Benetton, chairman of Benetton Group.
“Our efforts are focused on recovering profitability by simplifying the business model and focusing on our brands,” he added.
The company said the new structure will improve the brands’ competitiveness in the market “through an innovative rethinking of the structure that supports them and that provides maximum alignment with each brand’s objectives.”
This is a further step in a program that kicked off in 2012 “that is now starting to produce its first results, including improved cash-flow generation and disposal of a limited number of store locations no longer in line with the positioning” of the brands that are part of the group, said the firm, which delisted from the Milan stock exchange last year.
The strategy will help the brands to respond faster and more effectively to the quick pace of changes in the market, said the company, citing United Colors of Benetton and Sisley as brands “with very high levels of awareness across all key markets for apparel, including emerging markets.”
Benetton Group will increasingly differentiate the way in which its two main brands operate within diverse markets and focus more on directly-owned key and flagship stores. In addition, the Veneto, Italy-based group plans to further develop new retail concepts and target key markets, as well as progressively develop its accessories and licenses, such as the agreement it recently inked with Puig for the launch of Benetton fragrances.
The manufacturing entity will be mainly dedicated to serving the group’s brands, through its existing production platforms in Serbia, Tunisia and Italy.
“The real estate management entity will be allowed to maximize returns from store locations that are either no longer strategic for the group or no longer in line with the sales format through which Benetton Group’s brands operate in the market,” said Benetton.