In the end, the changing of the guard at Benetton all apparently played out amicably — according to the official release. However, CEO Massimo Renon’s four-year tenure came to a screeching halt with contentious accusations from co-founder Luciano Benetton.
New CEO, Claudio Sforza, needs to find a way to cut ties with an increasingly difficult and dated past and put the house of Benetton in order. He also needs to focus on the brand’s new personality and fashionable staples and not operate the company as another cog within an industrial conglomerate.
“Following an agreement reached with Benetton Group, CEO Massimo Renon is going to consensually leave the company after completing his term of office. After the full and unanimous approval of the financial statements for 2023, which happened in an atmosphere of transparency and collaboration, the company and the outgoing CEO mutually acknowledge that a cycle is coming to a close on June 18,” Italian fashion empire Benetton Group said in a statement.
“I would like to thank the company and all my collaborators for the precious support I received and the sympathy that was shown to me for the entire duration of my mandate,” Renon swooned as he prepared to leave, stage left.
Benetton’s troubled recent history suggests another story and the fashion giant has turned to replacement Claudio Sforza to stem losses after Renon, who in significantly less amicable times was publicly accused of being responsible for the retailer’s ongoing decline by co-founder Luciano Benetton. The 89-year-old Luciano has also announced that he is stepping down as chairman of the family-owned group and in his parting shot accused his chief executive of leaving “a gap of 100 million euros” after four years at the helm of the apparel brand.
Claudio Sforza’s Challenge at Benetton
Sforza was born in 1957 and has held senior positions at a number of major Italian groups, including as CEO of gaming company Gamenet and CFO at postal group Poste Italiane. His official ratification as the new boss will need to be approved by Benetton Group’s general meeting of shareholders on 18 June, when Renon’s tenure officially expires.
And he will inherit a mess. The latest figures officially adopted by Benetton’s board of directors turned out to be even worse than forecasts had anticipated as the brand saw net losses almost triple to $247 million in 2023, after previously recording a loss of $87 million in 2022. This loss was mainly due to impairments of $161 million.
Over the past decade, Benetton has accumulated losses of more than $1 billion. Family holding company Edizione has committed to supporting the Benetton Group’s reorganization and recovery plan by pledging to invest $280 million, having already invested over $375 million in the previous three years.
Benetton’s Betrayed
“I trusted him, and I was wrong. I was betrayed in the truest sense of the word. A few months ago, I realized that something was wrong and that the image of the group that management presented to us at board meetings was not real,” Benetton said in an interview with Corriere della Sera. Yet many may point to the family and their widening interests, rather than Renon, as the architect of the company’s decline.
Founded in 1965 in northeast Italy by four brothers and a sister, Benetton made its reputation through its wool sweaters in a wide range of colors, which evolved into United Colors of Benetton and became a global name. It became a global sensation from the 1980s onwards when provocative and indelible advertising imagery from photographer Oliviero Toscani – including a newborn baby and an AIDS patient on his deathbed – provoked debate and quite often outrage.
But as global fast-fashion rivals such as Zara and H&M ramped up their international expansion, joined in more recent times by the likes of Chinese powerhouse Shein, Benetton’s star began to fade. The company was slow to adapt to the digital revolution and ecommerce. Luciano Benetton took the helm in 2018 to try to turn its fortunes around, and then the appointment of Renon as CEO two years later failed to deliver the expected results.
Benetton’s Long-Term Spiral of Demise
However, while Renon’s four-year tenure appears to be little short of disastrous, in truth, this has been a crisis two decades in the making. Perhaps the bigger news is not that Renon is leaving, but that Luciano Benetton has stepped down from the group’s presidency, formally ending the family’s oversight of the brand for the first time in its history. But not so fast, the Benetton family will continue to manage the group through holding company Edizione.
Against a backdrop of the global financial crisis, pandemic and increasing conflict around the world, Benetton saw group revenue from 2012 to 2023 fall from around two billion dollars to just over one billion.
In the meantime, the Benetton family’s business interests continued to grow in other sectors and fashion now represents just two percent of the company’s business empire. Its ties with a sister business struck another hammer blow to the brand. Holding company Edizione owns Autostrade per l’Italia, which is responsible for maintenance of the Polcevera viaduct in Genoa, known as the Ponte Morandi, which fatally collapsed in 2018. The company became embroiled in controversy over accusations of poor management and maintenance of the structure and investigations revealed that several members of the Benetton family and Edizione’s management had been aware of existing problems.
Benetton’s cutting edge and edgy advertising also brought with it both acclaim and controversy. The UNHATE campaign of 2011, which featured a photo of then-Pope Benedict XVI kissing an Islamic Imam, caused shock in Italy and represented the first warning signs that its desire to provoke crossed a line.
Globalization prompted Benetton to shift production from Europe to Asia (it’s now doing the reverse, working to near shore production post-pandemic), and in 2013 it was dragged into a major supply chain scandal after the collapse of Rana Plaza in Bangladesh, one of the largest factories producing fast-fashion garments, killing over 1,100 workers. While Benetton issued a statement saying that it had only produced a small number of garments from the factory and did not have any relationship with suppliers, by the time of the tragedy the company name was dragged into the headlines.
Separately, Benetton was also investigated over the punitive nature of its store franchising contracts and business relationships with accusations that some of its practices incentivized waste.
The Color of Money
From an innovation and style perspective, Benetton has failed to capitalize on its widespread presence in key locations across Italy and its global reputation, built by remarkable advertising campaigns during its glory days in the late 1990s. Emblematic of its decline, Benetton’s flagship Milan store in Piazza Duomo closed despite attempts by the group to reposition Benetton at Milan Fashion Week as a streetwear brand first and a fashion brand second. The closure of the Milan store felt like the end of an era. Luciano Benetton stepping down from his leadership role with the eponymous brand feels epic.
New CEO, Claudio Sforza, needs to find a way to cut ties with an increasingly difficult and dated past and put the house of Benetton in order. He also needs to focus on the brand’s new personality and fashionable staples and not operate the company as another cog within an industrial conglomerate.
Arguably, the competition has never been fiercer, with global rivals excelling in all retail categories from discount fashion brands to luxury labels. On top of that, Benetton’s name is associated with a complicated legacy, especially in its native Italy. Sforza will need to rediscover the brand’s essence and leverage it to be noticed globally, but this time for all the right reasons on point with next gens and their demanding values and idiosyncratic lifestyles.
Image Credit: The United Colors of Benetton
