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Benetton profits grow but outlook uncertain in key markets

Italian fashion group Benetton said net income increased from €29m (£24m) to €40m (£33m) in the first half of 2010, as the business focused on higher value product, cost savings and the benefits of positive currency effects and sales in emerging markets.

Group revenues edged up 1% to €891m (£737m) during the half to June 30, a 0.6% drop on a currency neutral basis.

Benetton remained cautious for the full-year outlook, and said that it expected a slight reduction in operating margins for the full year due to significant non-recurring costs, a greater cost of borrowing and tax rises. The retailer said it would invest in its store portfolio in the second half and focus on the Asian markets as new orders for autumn 10 showed a weakness in the economies of more established markets for the group.

Benetton said that the slow-down in Greece and Spain was offset by a solid performance in Italy in the first half. Benetton’s stores in emerging markets – which account for 13% of sales –showed “strong growth”, particularly in Mexico and India.

Group brands achieved “good results” in the period, particularly with the younger fashion brands Sisley, 012 and Sisley Young brands.

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