The Benetton Group Annual Report 1996

Dear Shareholders,
in 1996 the Benetton Group achieved a series of excellent results. The consolidated net income, in
particular, reached a record level, almost double that of 1990. Over the same period, the stockholders’
equity has more than tripled. For the first time in our history, net indebtedness was reduced to zero and
we ended the year with substantial liquidity. The dividend distributed to shareholders was up more than
18% on the previous year.
As far as the overall organisation of the company is concerned, in addition to implementing an incisive
plan to contain operating costs and to effectively manage financial risks, we continued to make
progress in innovation and flexibility, enabling us to respond rapidly to changes in the market and to
seize new opportunities for development. As a result, despite international stagnation in consumer
spending, we sold three million more items in 1996 than in the previous year. Highest growth was
achieved in some of the main European markets: France, Great Britain and Germany.
Much of this success is undoubtedly due to revolutionary changes in our sales organisation world-wide,
where priority has been given to larger, high quality shops, rather than to the number of outlets. During
1996, we opened several prestigious multi-purpose megastores, for example, in London (Benetton’s
largest store) and in New York, where the outlet on Fifth Avenue occupies one of the city’s finest early
twentieth-century buildings. Results to date confirm that our decision was justified, both in terms of
profitability and the consolidation of the Group’s global image.
Our emphasis on innovation and on achieving the best possible price-quality ratio, starting with the
choice of raw materials, was also a factor in our commercial success during 1996. In particular, our
technically advanced textile 206, combining practically and good looks, found immediate favour with
the public: since it was first introduced, some 8 million items made from this fabric have been sold
around the world.
The Castrette complex, the world’s most advanced integrated production facility in the textile-clothing
sector, has consolidated our manufacturing capacity in Europe and increased our competitiveness
world-wide. Investment in new logistics technology has enabled us to significantly reduce transportation
costs and, above all, to greatly improve the efficiency, speed and quality of our customer service.
We know that we must continue with our efforts, and not content ourselves with the results achieved to
date. We go forward justly satisfied with our past successes, but with the ideas, commitment, team spirit
and openness needed to meet the challenges of the future. We have grown considerably in recent
years. Now we are ready to embark on the next stage of our journey, initiating new phases of
development.