Fashion

Benetton in crisis: 100 million operating loss and recovery plan

Luciano Benetton in an interview: 'Now we need to look ahead, in the coming months a plan for the future will be made'

25 May 2024

5' min read

Benetton is in crisis again, due to a €100 million negative cash flow. This is said by Luciano Benetton who, in an interview with the Corriere della Sera, bids a bitter farewell to the company.

"I trusted and I was wrong. I was betrayed in the truest sense of the word. A few months ago I realised that something was wrong. That the picture of the group that the top management was telling us at board meetings was not real,' said the founder. And that picture was revealed in its entirety some time later: 'In one of the board meetings in the following months, the bombshell exploded.

They suddenly present a dramatic budget gap, a shock that leaves us breathless'. In particular, Benetton added: 'We will be around 100 million. However, everything that has emerged and is emerging since September '23 is a disgrace'.

Luciano towards farewell

Now the founder is preparing to leave the clothing group, emphasising, however, that 'now we have to look ahead, in the coming months a plan for the future will be made, we have lost four years and this makes everything more difficult as we do not have a magic wand. Unfortunately there will be sacrifices to be made. What I can say is that maximum effort will be put into regaining the energy of better times and giving new life to this brand that represents so much to our family and bears our name'.

'Fortunately,' he added, 'we had decided some time ago to withdraw Benetton from the Bourse. And so the entrepreneurial risks were and are all in the family. But once again, for my story, for what the company means, for the employees, the families, the many who confidently enter the shops from Moldova to Paris from New Delhi to Los Angeles, before leaving the group I intend to explain with the transparency that characterises me what has happened without shirking my responsibilities'.

Edition launches reorganisation and relaunch plan

Edizione has always supported Benetton Group, supporting it with 350 million euro in the last three years alone, and will continue to do so in the coming years. In particular, with the new plan to reorganise and relaunch the clothing group, the Ponzano Veneto-based holding company is ready to invest a further Euro 260 million over time. The turning point, as reported by sources close to the group, will come as early as next 18 June, when the Benetton Group shareholders' meeting is scheduled, following which the shareholder Edizione will introduce the necessary discontinuity in the company's managerial management. In other words, it will move towards the appointment of a new CEO, to replace Massimo Renon, who was accused in an interview today by founder and (resigning) chairman Luciano Benetton of having created, together with the other executives, a $100 million hole.

Higher-than-expected loss

In this regard, it is pointed out, the management referred to took office in 2020, presenting a plan that envisaged a break-even in 2023 and positive cash flows in the period 2024-2026. Instead, a loss (and not a hole in the balance sheet) was generated, which was not known to the board even a few months ago.

Moreover, Edizione's new course has never dealt with Benetton so far, as the management chosen in 2020 (management that is now coming to an end) is in place.

"Company represents 1% of Edizione's business"

At Edizione, there was surprise when learning of Benetton's results, but at the same time there is a willingness to identify the most appropriate solutions. Beyond the bitterness about Benetton Group's difficulties, from a business perspective the company represents about 1% of Edizione's business. Finally, it is concluded, Benetton Group's accounting situation does not show a hole in the balance sheet, but in the year's accounts a significant loss has emerged with respect to the forecasts of the three-year plan presented in the past by the management and confirmed by it until a few months ago.

The trade unions: bigger hole than expected

The Benetton group's failure to reach the targets set for 2023 in the industrial plan 'was expected, but certainly not of the magnitude indicated in Luciano Benetton's interview with Corriere', i.e. 100 million. This is the reaction of the trade unions in Treviso to the statements made by the founder of the textile group, Luciano Benetton. The unions report that, due to the trend not corresponding to expectations, they had already been informed that the result bonuses foreseen in the integrative contract would not be distributed. The 2023 figures, however, have not yet been released.

"The sum of the Benetton Group's deficits from 2013 to date exceeds one billion euros, so it is not the first time that the company has had to recoup a balance sheet loss of more than 100 million like the one this year. It has always been Luciano Benetton who has intervened to settle the debts, and he has never let the price of the crisis fall heavily on the workers'. So says Gianni Boato, Femca Cisl general secretary of Treviso, after the statements of the founder Luciano Benetton. "As a union we hold out our hand to Benetton - he adds - and we invite him to involve the workers and the great know-how present in the company at all levels in the strategic choices".

Mayor Ponzano, concerned for the town and Benetton employees

"Solidarity contracts have been in place for some time, and it is clear that this news raises new concerns in the community I represent, given that many of my fellow citizens work at Benetton". This was said by Antonello Baseggio, mayor of Ponzano Veneto (Treviso), a town that is the heart of the Benetton system, commenting on the interview of the founder, Luciano, to Corriere della Sera. 'Benetton,' he emphasised, 'has always been the pride of this area, so much so that the association between the name of Ponzano and that of the family has been automatic for many years. Of course, having entrusted the company to people who were not capable was a huge mistake, and this in part had to be understood already during management'. 'But leaving it is not correct,' Baseggio continues, speaking of the entrepreneur's announced intention, 'at least out of respect for those who have believed in this company and lived in it. Thousands of workers and hundreds of managers of high calibre have passed through Benetton. If I were the 'father' of a company I would fight until the end to ferry it to a safe harbour'.

Benetton ad: no comment, I will respond with my lawyers

'I do not comment on the subject, I am organising with my lawyers for a structured response'. This is what Massimo Renon, CEO of Benetton Group, says after the interview with Luciano Benetton published today by Corriere della Sera.