MILAN — Benetton saw flat sales in the first quarter of the year as higher costs bit into profits.
Net profit for the three months ended March 31 fell 16.9 percent to 23 million euros, or $30.1 million, from 28 million euros, or $35 million. Revenue dipped 0.8 percent to 378 million euros, or $495.2 million, from 381 million euros, or $476.6 million.
Dollar figures have been converted from the euro at average exchange rates.
Benetton said sales of casual clothing, its core business, were 339 million euros, or $444.1 million, in line with the year-earlier period.
Operating profit for the quarter shed 21.5 percent to 36 million euros, or $47.2 million, from 45 million euros, or $56.3 million. Benetton said higher costs linked to the expansion of its directly owned retail network hurt margins.
Benetton said first-quarter investments rose to 23 million euros, or $30.1 million, from 21 million euros, or $26.3 million. Of this year's expenditures, about 15 million euros, or $19.7 million, went toward commercial activities.
Meanwhile, a Benetton board meeting named Alessandro Benetton as a vice president. Alessandro is the 41-year-old son of president Luciano Benetton and is being groomed to one day take over the company's helm. Shareholders voted to modify corporate statute to allow the company to have two vice presidents. Alessandro will share the title with his uncle, Carlo.
Benetton's board also gave Alessandro Benetton a mandate to expand the company's activities in Asia, especially in China and India. Last month, Alessandro Benetton traveled to China to start studying the market. Benetton plans to open 40 stores there this year, including flagships in Beijing and Shenzhen. The goal is to roll out as many as 200 stores in China by 2008.
Alessandro Benetton, who already sits on the boards of Benetton and other family controlled businesses such as Edizione Holding and Autogrill, founded merchant bank 21 Investimenti in 1993.
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