Restructuring: More Italy and less global for Benetton

ANALYSIS_ What lies ahead for Benetton Group? In an attempt to make its name shine again within the ever crowded fast-fashion market, Benetton Group is reviewing its restructuring plans. Aimed to cut down losses and to retake its place amongst forefront fashion labels,

last November, Benetton announced the implementation of a restructuring plan. In a nutshell, the restructuring will see the business split into three separate companies, all controlled by Edizione holding company, owned by the Benetton family.

While

the first of the three divisions are responsible for the management and control of the group's brands, the second - the manufacturing division – will be mainly devoted to the production for brands Benetton plants in Serbia, Tunisia and Italy. Finally, the real estate division is empowered to decide which establishments are no longer strategic for the group.

But overall, and according to market insiders, the overhaul at the colourful Italian fashion house will imply a major focus on Italy and a progressive detachment from its international markets. Or, as the Italian journal put it in a recent report: “more Italy and less global”.

Italian focus for Benetton first, other markets will follow later in 2015

Benetton, which has 6,500 stores in 120 countries, has found out that between twenty and thirty markets are no longer considered strategic, what will turn into the closure of 25 percent of their franchises.

At present, the European market represents 75 percent of total turnover of the group; Italy alone, represents 39 percent. "The year 2013 was the result of a complex dynamic, combining the beginning of a revival and the closure of shops, as well as the removal of certain markets with a consequent fall in volumes," said Benetton Group´s CEO Biagio Chiarolanza.

When presenting the latest financial results, Chiarolanza stressed that the company will “focus on our core brands, Benetton and Sisley and in key markets, primarily Europe and then other countries such as India, Korea and Mexico.”

Secondly, it will come “the transition to a business model that focuses on the consumer, then the mentality 'sell-in', which has been our strength in the past, to a 'sell-out'."

The first results of the new course are positive for the group. "At the end of 2013, our debt has fallen below the threshold of 300 million due to cash flow generation over the last 7-8 months and expect a further decline this year," proudly highlighted the CEO at Benetton Group.

"Over the past six months, in 130 stores key, which will ideally be the first to be subject to the redesign, sales of the collection A/W 2013-14 have increased by 4-5 percent compared to the previous season and those of the S/S 2014 grew 17 percent, while the average traffic in the stores has increased by 10 percent. 2014 will be the year of the implementation of the renewal and I believe that in 2015 the company will take of great satisfaction," Chiarolanza foretells.

Angela González Rodríguez