The Benetton Group reported the consolidated results for the
first quarter of 2012. Revenue and income were less than expectations. Total revenues of € 428 million were minus 5.5% against first quarter 2011. Gross operating profit is 44% slightly down compared to 44.7% in 2011due to the increase in raw material costs. Net income for the quarter is a reported € 10 million.
Group net revenues in the first quarter of the year were € 428 million, down in line with expectations compared with the same period of 2011 (-5.5% at current exchange rates and -5.7% currency neutral). However, direct sales performance was positive on a like-for-like basis with 6.1% growth compared with the same period of the previous year.
Developing and high growth markets confirmed the positive trend of recent quarters, with growth in Russia, Mexico, Korea and India. However, the rest of Latin America, China and Turkey were down. Traditional western markets showed growth in continental Europe, partly due to the positive direct sales results, and modest growth in the USA. However, Southern European countries were down, including the Italian domestic market, still influenced by recessionary economic conditions. There was a total fall in revenues in these markets of 7.9% at current exchange rates and 8.4% currency neutral.
Gross operating profit for the quarter was € 188 million, equivalent to 44% of revenues (44.7% in the comparative period). The reduction was attributable to the already mentioned increases in raw material costs, particularly cotton and wool, which resulted in a corresponding increase in cost of sales.
The contribution margin was € 155 million, against € 167 million in the reference period, and was 36.1% of sales. Operating profit was € 12 million (€ 34 million in 2011), 2.8% of revenues compared with 7.5%, impacted by a large reduction in structural costs, which was offset by a cost increase of direct sales, following the takeover of stores previously operated by third parties, and reduction in some extraordinary income. The results of foreign currency hedging were positive in the quarter, and the average tax rate was slightly lower than in the past. As a result, net income was € 10 million, equivalent to 2.4% of revenues (€ 19 million in the first quarter of 2011, equivalent to 4.3% of revenues). In the first quarter, the group made net investments of € 34 million, compared with € 27 million in the corresponding period of 2011. Most of these investments were for renewal of the stores’ network.
The Benetton Group, based in Italy, is a major player in the fashion apparel sector, trading in over 120 countries around the world. Group activities are divided into the following two segments, apparel and textile. Its apparel brands include United Colors of Benetton for adults and children, Sisley, Sisley Young and Playlife. Textile consists in the production and sale of raw materials, semi finished products and industrial services. The group has a distribution network of over 6,500 stores around the world.