Benetton Profits Fall 63 Percent

Currency fluctuations, shipment rescheduling hit Benetton's results.

MILAN — Benetton Group SpA remains upbeat for the second half of 2009 despite reporting a 63.1 percent decline in first-half profits due to the rescheduling of shipments and unfavorable currency fluctuations in emerging markets.

This story first appeared in the August 6, 2009 issue of WWD.  Subscribe Today.

“The combination of the good level of orders taken for the new fall-winter collection and actions currently in progress on the cost front thus allow reasonable optimism for the end of 2009 in respect of sales, profit and net indebtedness,” chief executive officer Gerolamo Caccia Dominioni stated Wednesday.

Net earnings for the six months through June 30 fell to 26 million euros, or $34.7 million, from 72 million euros, or $110.2 million, in the first half of 2008. Dollar figures were converted at average exchange rates for the period to which they refer.

Benetton said it moved the delivery time of the fall-winter 2009 collection to the third quarter to better match seasonality, provide improved service to clients and improve management of transport and logistics.

“The decision…was taken in this specific market situation to optimize synchronization of demand for the products with the actual presence of the new collection garments in the stores,” the ceo explained.

This impacted turnover by 88 million euros, or $117.5 million, leading to an 11.4 percent drop in first-half revenues to 882 million euros, or $1.18 billion, although net of the shipment effect, revenues declined 3 percent.

Dominioni said he expected the temporarily deferred sales to be recovered in the third quarter, with a cumulative reduction of around 3 percent compared to the first nine months of 2008.

He added that this and other reorganization plans, launched at the start of 2009, had generated “initial benefits” to the cost structure and would yield “further positive results” in the second half of the year.

“Among other things, this will allow a selective stimulus to the sales network, giving a positive impulse to activity,” Dominioni stated.

As of June 30, the group’s net financial indebtedness improved to 678 million euros, or $976.5 million, from 689 million euros, or $992.3 million, at the end of March.