MILAN — Benetton Group SpA bid farewell to both its chief executive and chief financial officers on Monday and said it could take months before the company hires replacements.
Chief executive Silvano Cassano and chief financial officer Pier Francesco Facchini resigned, effective immediately, Benetton said Monday. In a sign of just how sudden their departures were, neither executive participated in a conference call on the company's third-quarter numbers. Investor relations and public relations personnel fielded queries from puzzled analysts and journalists. Meanwhile, investors sent Benetton shares down 8.5 percent to close at 14.05 euros, or $17.98, on the Milan Stock Exchange.
Net profits for the three months ended Sept. 30 rose 17.2 percent to 30 million euros, or $38.4 million, boosted by one-time gains. Sales advanced 6.1 percent to 474 million euros, or $606.7 million, as the company cited "significant" growth in Mediterranean countries, Eastern Europe, China and India.
(Dollar figures have been converted from the euro at average rates for the period to which they refer.)
Cassano and the Benetton board clashed over international strategy, especially in emerging markets such as Asia, Mara Di Giorgio, head of Benetton's investor relations, admitted during the conference call. However, a Benetton spokesman said Cassano chose to leave the company, while Facchini stepped down for personal reasons.
The company is just beginning its ceo search and hopes to have the new executive, probably an outsider, in place by May, the spokesman said, adding a cfo appointment could come earlier. Senior and middle-level executives will oversee daily management of the company, while chairman Luciano Benetton and his son, vice chairman Alessandro Benetton, will continue to administer overall strategy, Di Giorgio said during the call. Cassano will remain a board member until his mandate expires next May.
"There was a different vision about the future growth of the company," the spokesman said of Cassano's departure.
Benetton said in its statement that one of the new ceo's responsibilities will be developing Benetton, especially in the Far East.
Clearly the company is in a transitional phase in more ways than one. Alessandro Benetton, the 42-year-old scion of the family empire, will take the reins sometime next year when his father retires. Still, the timing of this handover hasn't been specified. Alessandro will oversee strategy in his new, enlarged role but he won't become ceo or oversee day-to-day management, the spokesman said."Alessandro is above the ceo. He is a shareholder and we have always believed in differentiating between shareholders and managers," he said.
Cassano, a former Fiat executive, spent three years at Benetton. He joined the company just after Benetton posted its first ever full-year loss in 2002. In 2003, he presented a long-awaited industrial plan for the apparel group. The four-year, 430 million euro ($526.1 million) blueprint focused on tasks like speeding up the supply chain, increasing royalty income from licenses and boosting product quality. But many investors and analysts criticized the plan for not being aggressive enough to fight fierce competitors like Hennes & Mauritz and Inditex's Zara.
"The customer has to have a reason to come into the store," Cassano said at the time. "We're not accepting a price war."
Benetton's financial results have improved over the past few years — as the third-quarter numbers show — although one-time items padded profits. A real estate sale in Madrid and other financial transactions generated one-time gains of 6 million euros, or $7.7 million. Stripping away extraordinary items, third-quarter operating profit from regular operations dropped 6.2 percent to 42 million euros, or $53.8 million.
"With these results we can already say we have achieved the objectives that we set for this phase of the company's development," chairman Luciano Benetton said in a statement. "We are now ready to tackle a new period in which we plan, in addition to strengthening areas where we are already present, renewed commitment to growth in emerging countries and, generally, in all countries with significant demographic growth."
Benetton reiterated its full-year 2006 forecasts for sales to grow about 8 percent, with net profit coming in between 6.5 and 7 percent of revenue.
The company's board also approved a new investment package of 70 million euros, or $89.6 million. Of that sum, 50 million euros, or $64 million, is destined for the expansion and renovation of its logistic hub in Ponzano, Italy. Benetton said the center will employ the industry's most advanced technologies to manage higher volumes and faster store deliveries.
The company said that it invested 90 million euros, or $111.6 million, in operations in the first nine months of the year, most of which went toward expanding and modernizing the retail network. Benetton invested 19 million euros, or $23.6 million, in a new manufacturing plant in Croatia.
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