Benetton, Now 25, Wants to Be Bigger Yet
From a small family-owned business in a backwater city, the Italian sportswear firm Benetton Group S.p.A. has become what some in the industry call the McDonald’s of fashion.
The $1.5-billion giant sells its colorful jackets, knits, shirts, pants and skirts in 5,900 Benetton outlets in 82 countries. The company also has interests in department stores, hotels and real estate as well as in the expected fashion spinoffs such as watches and perfume.
Now, with a quarter century under its belt, Benetton is on a buying binge, investing in tennis racquets, ski boots, even Barbie doll clothes.
At a 25th-anniversary party recently at Villa Minelli, the elegantly restored 17th-Century villa near Venice that Benetton uses as its headquarters, founder Luciano Benetton discussed the company’s plans to expand its empire into sports equipment and other ventures.
Through his family’s Edizione Holding S.p.A., Benetton recently bought the Nordica ski-boot company, which is situated near the Benetton villa in Ponzano.
Earlier this month, the company purchased 80% of Prince Holdings Inc., a U.S. manufacturer of tennis and squash equipment, for an estimated $220 million. The Lawrenceville, N.J., company sponsors tennis stars Jennifer Capriati and Gabriela Sabatini.
In the past year, Benetton has also acquired an Italian company that makes mountain-climbing and hiking equipment and a manufacturer of eyeglasses.
“With this new venture into the sports arena, we seek to double our size by 1995,” Benetton said.
Luciano Benetton also disclosed at the birthday celebration that one year before, he had been deep in negotiations to acquire the German sports-equipment giant Adidas AG. (Adidas was later sold to a group headed by French businessman Bernard Tapie.)
The company spends one-fourth of its advertising budget sponsoring sports players and games, which range from Formula One racing to rugby and basketball teams.
In addition, the company is involved in a joint venture with Barbie doll creator Mattel Inc. to design a wardrobe for the popular doll. If successful, the project would give Benetton a foothold in the toy market.
Despite its success, however, Benetton has seen its share of controversy.
During the past year, Benetton backed out of an unfortunate financial services venture; Luciano Benetton had thought the field would be profitable because of Italy’s high savings rate.
The U.S. Federal Trade Commission launched, then earlier this year closed, an investigation of the company prompted by a number of suits filed by American licensees alleging franchise-law violations.
The Benetton boutique licensees accused the firm and its agent of oversaturating urban areas with stores, of underestimating start-up costs and of overprojecting sales.
That inquiry, along with a general slump in American retail and a trend toward larger stores, has brought the number of U.S. Benetton outlets to 600 from 800.
