Benetton drops the ball
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Italian fashion giant Benetton reported a sharp drop in net-profits for the year 2002 and at the same time announced that 46-year old Silvano Cassano was named its new chief executive. Turnover for 2002 showed the staying power of the clothing division and a sharp drop in the sports division, with a total of 2.0 billion euros, compared with 2.1 billion in the previous financial year.
Consolidated revenues of EUR 2.0 billion, income before extraordinary items of EUR 128 million euros, net income at a loss of EUR 10 million euros and net debt is down to EUR 613 million. In 2002, the strategic decision to focus Benetton activity on the core businesses of casual clothing and sportswear resulted in an extensive reorganisation of the sports equipment division, with the objective of bringing the Nordica, Prince and Rollerblade brands to a substantial break-even and launching the programme for their divestiture, which was finalised in the first quarter of 2003.
The Group's gross operating income was EUR 867 million, 43.6% of turnover, from 43.3%, positively influenced by continuous research into manufacturing optimisation and in-spite of an incisive price policy.
Income from operations, for an amount of EUR 242.6 million, was 12.2% of revenues, with a reduction of 1.4 % compared with the preceding financial year, due to the impact of general expenses for commercial development, which have not yet been absorbed by the potential increase in turnover.
In 2002, normalised consolidated net income (before extraordinary items) was EUR 128 million. Profits for this year have been impacted, in particular, with the sale of the sports brands. Consequently, the financial year registered a loss of EUR 10 million.
For 2003 the company predicts that in an economic situation characterised by a general contraction in consumer spending, the fall in sales in the clothing, that performance will be in line with the 2002 financial year, both in terms of turnover and margins. Net income is expected to increase, compared with normalized net income in 2002 and net indebtness will experience a sharp decline.