MILAN — Benetton Group SpA said Wednesday it would propose to buy back up to 10 percent of its share capital at its annual meeting next month.
This story first appeared in the March 20, 2008 issue of WWD. Subscribe Today.
Benetton said the proposed buyback of up to 18 million ordinary shares would run for a period of 18 months; enable the purchase of a portfolio of treasury shares, “considering this to be a strategic investment capable of producing added value for shareholders,” and serve any share incentive schemes. Benetton said it does not currently hold any treasury shares.
The company also said its board approved the 2007 financial statements, which were released last month, showing a 16.3 percent increase in earnings to 145 million euros, or $198.8 million at average exchange, on sales of 2.09 billion euros, or $2.86 billion.
Last month, Benetton said it expected sales growth to slow to between 6 and 8 percent on a like-for-like basis this year. Net profits and EBITDA are forecast to grow over 7 percent.
Benetton lost more than a third of its value on the Milan Stock Exchange in January on fears that slowing economic growth and consumer spending could undermine middle market retailers this year. The Benetton family has since added to its controlling stake, buying shares worth 5.5 million euros, or $8.7 million at current exchange, through an investment vehicle, which holds nearly 70 percent of the company.
Benetton’s stock closed down 1.6 percent to 8.48 euros, or $13.37, at the end of trading in Milan on Wednesday. The share price is down 28.5 percent this year.
In addition to the buyback proposal, Benetton plans to ask shareholders to approve an increase in its dividend of 8 percent. The Italian clothing retailer said in a statement it would submit the dividend of 0.40 euros, or 63 cents at current exchange, a share — equivalent to 73 million euros, or $115.1 million — for shareholder approval on April 24 and 28. It returned a dividend of 0.37 euros, or 51 cents at average exchange, a share for 2006.