Benetton confirms strength of its brand in challenging climate

06 Aug '09

5 min read

In Russia, finally, the start-up of the commercial trading activity has facilitated the introduction of new product segments and new network support services. There have been 9 openings in the country in the last twelve months. Total net openings in priority markets constitute around half of the over 350 additional stores opened worldwide in the last twelve months, the majority managed by third parties.

Gross operating profit, amounting to €401 million (45.5% of net revenues) was down in both absolute value (-€61 million) and percentage terms (-0.9%), largely due to the effect of the previously mentioned rescheduling of deliveries (-€38 million) and, to a lesser extent, due to the exchange impact (-€19 million), largely caused by the revaluation of the US Dollar against the Euro. Further negative effects were due to mix, while there was a positive impact of €24 million from both actions already planned and those included in the reorganization plan relating to sourcing and production efficiencies.

The contribution margin was €336 million (38.2% of revenues), down compared with €390 million in the corresponding period of 2008 (-€54 million and 39.1%), mainly due to lower commissions paid in respect of the reduction in revenues.

The incisive actions implemented at the beginning of 2009 to reduce general and administrative expenses have started to generate savings during H1/09, most evidently in the areas of cost of: temporary work, third party and consultancy services, advertising due to lower rates, notwithstanding the expected increase in depreciation and amortization, resulting from investments completed in the last financial year.

In addition, non-recurring items worsened by a total of €19 million (from a recorded one-time income of around €8 million, to a total expense of €11 million), including around €10 million of reorganization costs.

As a result, operating profit (EBIT) was €43 million (it would have been €74 million without the rescheduling of deliveries), down from €116 million in the corresponding period of 2008. Overall, the following significant items impacted on this result: on the positive side €12 million was generated by the reorganization plan already taken; on the negative side €31 million was due to the temporary delay in shipments, another €11 million resulted from the exchange rate trends (with a corresponding income from foreign currency hedging which will be commented on later), and finally €19 million due to higher non-recurring expenses.

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