LOWER-PRICE STRATEGY LEADS TO FLAT PROFITS AT BENETTON IN 1994

Byline:

NEW YORK--Reflecting an aggressive price reduction plan, 1994 profits at Benetton SpA were nearly flat at $122 million (210 billion lire). In 1993, Benetton's net earnings came to 208 billion lire.
Operating profits in 1994 fell 4.7 percent to $226 million (389 billion lire), as sales rose 1.3 percent to $1.62 billion (2.79 trillion lire). A year earlier, operating profits came to 208 billion lire and sales were 2.75 trillion lire.
In 1994, the apparel manufacturer and retailer implemented a plan of "aggressive pricing worldwide, slimmed down collections and strict control of production costs" in an effort "to meet customer requirements as closely and competitively as possible."
The Italian firm, based in Ponzano Veneto, said prices were reduced 8 percent in Italy and 13 percent internationally, with 28 percent cuts in Japan, 20 percent in South America and 16 percent in the U.S. The company noted that unit production was up 6 million items, or 8 percent.
In the face of these price reductions, the firm noted that gross margin in 1994 held close to 1993--41.21 percent versus 42.16 percent--"thanks to an increasingly stringent cost-control policy."
Benetton said foreign sales made up 70 percent of total sales in 1994, with particular strength in the Far East and Middle East.
The firm opened several megastores in the European Union during 1994. The stores, carrying a full range of apparel and accessories, were opened in Paris, London, Barcelona, Lisbon, Frankfurt, Vienna, Prague and Sarajevo. In the U.S., the company said a revamped retail network posted significant sales gains, as much as 50 percent in some cases.
The company said that its level of debt fell to $176.1 million (303.2 billion lire) in 1994 from 425.2 billion lire a year ago. During the year, the company opened 50 stores in China.--Fairchild News Service

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