Italian fashion retailer Benetton has reported its worst performance in India in more than a decade, as its sales and store count fell last fiscal amid increasing competition from global rivals.
The brand that until four years ago was the country's largest apparel brand, posted a 5% dip in revenue to Rs 699 crore with net loss of Rs 49 crore during financial year ended March 2017. A year ago, Benetton clocked sales of Rs 735 crore with a profit of Rs 2.3 crore.
Established foreign fashion brands such as Levi's, Benetton and Marks & Spencer have had a tough time due to increasing competition from new rivals such as Zara, H&M and US Polo, as well as slowing consumer demand at brick-and-mortar stores after demonetisation last year.
Sandeep Chugh, CEO at Benetton India said “The revenue loss is mainly due to demonetisation, especially at a time when we are in consolidation phase and topline was not being driven by expansion. This does not impact profits to that extent. So, what pushed the company to a loss last fiscal, according to Chugh, were mainly two factors - fire in a partner's warehouse and a capital-intensive consolidation exercise. "Otherwise we would have been at par with last year. Provisioning of the fire, which destroyed inventory worth millions, contributed to 70-75% of the loss. The balance was largely on account of a consolidation and strategising exercise that was planned to be a capital intensive project for us to be future ready. “
During 2016-17, Benetton shut about 119 stores and opened 63 doors at other locations. Currently it has 718 stores across the country.
A typical store of Benetton, which entered India in 1994, is usually one-tenth of the size of the stores of its rivals such as Zara and Gap that have large stores of 20,000 sq ft on an average.