Benetton to step down as fashion empire struggles

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Luciano Benetton handed over the reins of his fashion empire on Tuesday to his son, who must relaunch a struggling brand known for its controversial ad campaigns.

Benetton, 76, who founded his clothing company with his siblings 47 years ago, appointed his son Alessandro, already the firm's vice chairman, to head up the tired business during a general assembly of shareholders in northern Italy.

Benetton senior is to stay on at the company as an advisor.

"Alessandro Benetton will guide the evolution of the company in a scenario of changing markets, complicated by the credit crisis... to move swiftly and decisively towards growth and improved profitability," the company said.

The half-century has seen the brand grow into a giant, with some 6,000 stores in 120 countries, but it has faced stiff competition from newer high street chains such as H&M and Zara and has suffered from the eurozone crisis.

The Italian company has also had to deal with rising prices of raw materials like cotton.

Last month, Benetton posted a 28 percent drop in net profits for 2011 at 73 million euros ($96 million) on sales that fell by one percent to 2.0 billion euros.

In taking over the afflicted empire, 48-year-old Alessandro -- who studied at Harvard and is married to former ski champion Deborah Compagnoni -- will have to take difficult strategic decisions which may include asset disposals.

The brand is also de-listing from the Milan stock exchange so the family can resume total control of the company.

"Leaving the stock market and investing in ourselves and in the future of the group is a clear demonstration of our commitment, determination and intention to move beyond this complex phase," Alessandro said.

Giuliano Noci, professor of economy at Milan's Polytechnic University, told AFP the generation change was "a good move."

"Over the course of the last 10-15 years, Benetton has not had the capacity to innovate which distinguished it in the past... while the world of fashion underwent a great change with the arrival of Zara and H&M," he said.

The company will have to adopt "a more aggressive model" and "innovate their products, as Zara and H&M offer a more glamorous style," he added.

Benetton acknowledged that he was entrusting his son with a difficult mission, but said: "The challenge is always the same: to create, imagine, and be innovative -- that's what entrepreneurs have always done and will continue to do."

"Alessandro has shown -- not least in his business career -- that he is not a quitter. He is someone who aims for success in everything he does," the senior Benetton added.

The clothing chain became famous in the 1990s with a series of shocking ads.

One depicted a young nun in white kissing a priest dressed in a black cassock, and others addressed important issues such as AIDS, homosexuality, hunger, refugees, racism, religion, death row inmates and war.

The brand courted new controversy last year with a campaign featuring world figures kissing, including a photo-montage of an embrace between the Pope and a Muslim cleric which was dropped after the Vatican threatened legal action.

Alessandro said the key to reviving the brand was to take it to new markets.

"Since Benetton Group has always seen things 'in colour', allow me to say that it's not all black. There are expanding markets that we are ready to attack with determination," he said.

Luciano had named his son as his likely successor in 2005 and the extended family has always played a key part in the company's vision.

In 2006, three generations of the normally publicity-shy Benetton family posed for the cover of an Italian edition of Vanity fair in front of their 17th century villa in Ponzano Veneto, to celebrate the company's 40th anniversary.

Luciano Benetton, who sports white long hair and trademark round glasses, is one of Italy's most renowned self-made men.

As a teenager, he saw how popular the sweaters knitted by his younger sister Giuliana were and invested in his own knitting machine, selling the jumpers door to door before, flush with success, he opened his first factory.

In 1962 he jazzed up the wool market's traditional and rather dour sweater offerings by launching five young and informal models in 36 colours.

Photo campaigns shot by Italian photographer Oliviero Toscani captured Benetton's desire to promote tolerance, anti-racism and multiculturalism and secured the company world-wide fame as 'The United Colors of Benetton.'