The United Colors of Benetton, an iconic brand that defined fashion in the 1980s and 1990s, is undergoing a significant restructuring to address its recent financial struggles. Once a symbol of vibrant colors and groundbreaking advertising, Benetton now faces the harsh realities of a rapidly changing fashion landscape dominated by fast fashion giants and online retailers.
Financial Decline and Leadership Changes
Benetton’s financial performance has been a growing concern, with the company reporting a net loss of €230 million in 2023, a sharp increase from the €81 million loss recorded in 2022. The losses were compounded by significant impairments, reflecting the diminishing value of the company’s assets.
In response to these challenges, major leadership changes are underway. Massimo Renon, the current CEO, will be stepping down, a move expected to be formalized at the shareholders’ meeting in June. Renon, who previously held roles at Safilo, Marcolin, and Luxottica, has been under scrutiny, particularly from Luciano Benetton, the group’s co-founder and chairman. Luciano, who has been a driving force behind the brand since 2018, will also be stepping down, expressing regret over the direction the company has taken under Renon’s leadership. In a candid statement, he acknowledged that the past four years have been marked by missed opportunities, stating, “I trusted him and I was wrong… We’ve lost four years and that makes things more difficult because we don’t have a magic wand.”
Strategic Financial Support and Restructuring
To stabilize the company, Benetton’s holding company, Edizione, is expected to inject approximately €260 million into the business. This financial support is part of a broader plan to oversee the company more closely, ensuring that the necessary changes are implemented effectively.
As part of this restructuring, Benetton is also in negotiations with local trade unions to preserve jobs while implementing wage support measures. Under the leadership of new CEO Claudio Sforza, the company is exploring a “solidarity contract,” which would allow for reduced working hours and salaries in exchange for job retention. However, these proposals have met resistance from trade unions, who are pushing for less severe cuts.
Management Overhaul and Future Direction
The restructuring efforts extend to Benetton’s management team as well. Andrea Incontri, the creative director brought in by Renon in 2022 to revitalize the brand’s collections, has left the company by mutual agreement. Sforza, who was appointed CEO in June, is assembling a new senior executive team to lead Benetton through this challenging period. Key appointments include Cristina Girelli as CFO, Paolo Venturini as head of sales, and Vincenzo Meles as head of purchasing—a newly created role aimed at optimizing the company’s expenditure.
Sforza’s team is a seasoned group of professionals with a history of working together in various capacities, ensuring a cohesive approach to the company’s relaunch. The new management is expected to finalize and present a comprehensive turnaround plan by the autumn, aiming to reposition Benetton in a competitive market.
Benetton’s Path Forward
The challenges Benetton faces are emblematic of the broader difficulties encountered by legacy fashion brands in the digital age. The rise of fast fashion retailers like Zara and the growth of online platforms such as Shein and Temu have eroded Benetton’s market share, forcing the brand to rethink its strategy and operations.
The upcoming months will be crucial for Benetton as it seeks to regain its footing in a highly competitive industry. With a renewed focus on financial discipline, strategic leadership, and creative direction, Benetton aims to navigate these challenges and emerge stronger, once again capturing the imagination of fashion consumers worldwide.