May 14, 2008 / 1:24 PM / 9 years ago

UPDATE 2-Benetton Q1 profit, sales up, outlook confirmed

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By Gilles Castonguay

MILAN, May 14 (Reuters) - Italian clothing retailer Benetton turned in a 9 percent rise in first-quarter core profit on Wednesday on slightly higher sales, and confirmed its outlook for the year.

Benetton BNG.MI, known for its colourful jumpers, is aiming this year for a rise of at least 7 percent in its core profit and a similar rate for revenue.

“When looking at the autumn/winter orders, we’re confident about achieving our objective,” Chief Financial Officer Emilio Foa told analysts on a conference call. Foa said he expected orders for the collection to be 6-8 percent higher than the previous year.

Of the latest sales figures, Foa said May was turning out to be better than April, which had cool temperatures.

“I hate to talk about the weather but it did affect the performance (of sales),” he told analysts on a conference call.

“May (has) ... so far given us a different performance,” he said. “We are confident on the overall collection’s performance.”

Shares in Benetton, which competes against Hennes & Mauritz (HMb.ST) and Zara of Inditex (ITX.MC), were up 2.36 percent at 8.817 euros.

For the quarter, its core profit, or earnings before interest, tax, depreciation and amortisation (EBITDA), totalled 65 million euros ($100.5 million). At the net level, profit was 29 million euros, up 8.6 percent.

Revenue went up 3.4 percent to 465 million euros, with Benetton saying this sluggish due to the strength of the euro against other currencies in markets where it does business.

“In established markets, growth was in line with expectations,” it said. “There were significant rates of growth in France, Greece and the UK.”

Weakness was also present in Spain and Germany.

Benetton gets the bulk of its sales from Italy and western Europe. In an effort to reduce dependence on these markets, it has been expanding in five key regions -- India, Turkey, the former Soviet Union, Latin America and China -- where it said first-quarter results were in line with targets.

At a shareholders’ meeting last month, Benetton said it was not worried about a challenging economic scenario that had crimped consumer spending in many countries.

Fears of a U.S. recession are casting a shadow over the retail sector, where high-end luxury brands could weather any storm better than mid-market sellers and chains.

Benetton has said it will soon announce two commercial joint ventures in South America, similar to a deal in India. In that country, its Sisley brand stores are run by local retailer Trent Ltd (TREN.BO), part of India’s salt-to-software Tata group. (Reporting by Gilles Castonguay; editing by Rory Channing and David Hulmes)

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