Benetton confirms strength of its brand in challenging climate
Benetton Group confirms the strength of its brand in a challenging economic climate. Growth in Spring/Summer orders (+1% on previous year), marginal reduction expected for Fall/Winter (-3% on previous year). Comprehensive reorganization launched to improve customer service, product and store appeal and efficiency of industrial and sourcing activities, as well as organization, with important benefits from 1H/09.
In the context of improved service to the distribution network, shipments of the Fall/Winter collection were rescheduled, with significant revenues shifted from Q2 to Q3.
H1/09 revenues impacted by the rescheduling of shipments for an amount of €88 million. Net of the shipment effect, revenues were down by 3%.
Operating Profit at €43 million, substantially in line with 1H/08 net of effect of rescheduled shipment, non-recurring costs (€11 million of costs vs. €8 million of income in 2008) and the foreign exchange impact.
Cash generation improved (+€92 million against the comparable period), in spite of important investments.
The Benetton Group Board of Directors examined and approved the consolidated results for H1/09 and reviewed the first goals achieved by the reorganization plan implemented in previous months.
Consolidated income statement
Group net revenues for the first half of 2009 were €882 million (-11.4% against the comparable half year, corresponding to €114 million), impacted by a major change in the timing of shipments for the Fall/Winter collections, which saw a rescheduling of over €88 million of deliveries to the third quarter, to better match seasonality, provide improved service to clients and improve management of transport and logistics. The overall variation was also impacted by the deterioration in exchange rates (Korean won, Turkish lira, Indian rupee and the rouble among others) against the euro (-0.6%), and a worsening of mix, caused by the rescheduling of deliveries.
Textile segment sales increased by €3 million to €51 million, while apparel sales were €831 million, €117 million lower than H1/08. Of the latter, €132 million was attributable to the wholesale channel, in which the entire delivery rescheduling was concentrated, offset by growth of €15 million in direct sales, mostly resulting from the new openings.
Established markets, net of the effect of the rescheduling, which impacted the most on them, largely maintained their position; Italy, in particular, the Group's main market, demonstrated receptiveness to the new commercial proposals.
Emerging markets grew by 5.8% at constant exchange rates. The following individual markests are noteworthy: India, which recorded very good growth, driven by 95 new openings, and China, which reflected the first effects of the refocusing process with positive growth (on a like-for-like basis) in the second quarter of the year.
Mexico benefited from the opening of 120 corners and 18 new stores in the first year of operations, with a positive result in spite of the disruptions caused by swine flu. Turkey confirmed the strength of its business, with repositioning and enlargement of some stores in prime commercial locations; the opening of a flagship store in Istanbul is expected in October.