Italian fashion empire Luciano Benetton, foreshadowed plans to revive the flagging brand when he took control as chairman on Tuesday.
Luciano Benetton, 76, who founded the Benetton Group with his two brothers Gilberto and Carlo and sister Giuliana in 1965, announced he was standing aside after 47 years in charge of the company.
“Now it is the turn of my son Alessandro to become chairman,” Luciano Benetton said. “The challenge, however, is the same as ever. To create, imagine and be innovative: this is what entrepreneurs have always done and will continue to do.”
Assuming his new role, Alessandro Benetton, 48, immediately signalled a new approach as the Benetton Group invested 10 million euros (around 13 million U.S. dollars) for a 2 percent stake in Italian cashmere producer Brunello Cucinelli, which is currently listing its shares in Milan.
“It’s a high-quality investment, an entrepreneur I hold in high esteem,” Alessandro Benetton told reporters at the shareholder meeting at the company headquarters in the northeastern city of Ponzano, near Treviso.
“It’s a purely financial investment and opens a dialogue as far I’m concerned,” he said.
Bruno Cucinelli, which will make its debut on the Milan bourse on Friday, is expected to have a market capitalization of 527 million euros.
But Benetton sought to play down speculation that this could be one of several new alliances for Benetton, which is facing fierce international competition from Zara, owned by Spain’s Inditex, and Sweden’s H&M as both sell quality sportswear at affordable prices.
Between 2000 and 2010, Benetton’s revenues have remained steady at around 2 billion euros. By comparison, sales at Inditex have soared to 12.5 billion euros.
“I don’t foresee any alliance or financial or industrial partner in the short-term,” he told the media. “But by nature, I do not rule it out.”
Alessandro Benetton had been deputy-chairman of Benetton since 2007 and served on the board of directors since 1998.
He was an analyst at Goldman Sachs in London until 1992 when he established his own merchant bank “21 Investimenti” which has a network of private equity funds with combined assets of 1.3 billion euros with interests in France, Italy and soon Poland.
His father said he had proved himself as an entrepreneur and had the right skills to lead Benetton into the future.
“Alessandro has shown – not least in his business career when he set up ‘21 Investimenti’ – that he is not a quitter,” the family patriarch said. “The results testify to this. He is someone who aims for success in everything he does and that is what he will achieve.”
The company has a global network of 6,500 stores in 120 countries and in his previous role Alessandro played a key role in expanding Benetton’s interests in China and India.
“Our presence in five continents will be one of the elements that will allow us to overcome this delicate moment,” he said.
It may be one of the best-known Italian fashion brands, but the company has suffered from stiff competition in the midst of the global economic crisis and its net profit fell from 156 million euros in 2008 to 73 million euros in 2011.
It also has almost 548 million euros in net debt and is facing pressure to refinance a large portion of that by September 2012.
“We are tackling this critical time with a cohesive, expert and motivated organization, starting with the increasingly international top management team, which I started to put together in just the last two years,” the new chairman said.
However, experts have questioned its business model which relies on a network of franchises and the company’s limited expansion outside Europe, amid pressure on the young Benetton to re-energize the fashion brand.
The company said its decision to leave the Milan Stock Exchange in March and return control of the company to the family was the first step in making it more competitive.
“Leaving the stock market and investing in ourselves and the future of the group is a clear demonstration of our commitment, determination and intention to move beyond this complex phase,” Alessandro Benetton said.
“We want to invest in our strengths, in particular our worldwide presence, our invaluable network of commercial and industrial partners, the global fame and reputation of our brands, and our colorful fashions,”he said.
Benetton opened its first store outside Italy in Paris in 1969 and its brightly colored sweaters, pants and jackets became the cutting edge of a new kind of casual Italian fashion around the world.
The company’s controversial advertising campaigns like last year’s “Unhate” campaign created headlines and extended the brand’s reach.
Benetton was forced to withdraw the campaign which featured Pope Benedict XVI kissing a senior Egyptian imam on the lips and other world leaders.
