The emperor gets his clothes back; profile; Luciano Benetton

Benetton is back in the pink after the consumer spending trough of the Eighties. Paul Rodgers meets the firm's founder
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The Independent Online
Few company presidents pose nude in advertisements. But Luciano Benetton is an exceptional executive, and his company's ads are notoriously risque. Even he had to be "tortured" before agreeing to take part in the now famous 1993 shoot. "I was very embarrassed," he admits. The campaign, under the strategically placed banner "I want my clothes back", helped to bring in 460 tonnes of used clothing for the Red Cross

There are not many other things about his company that cause him to blush. Although it ran into trouble at the turn of the decade when a high lira and falling consumer spending squeezed the company's margins, Benetton is now in the rudest of health. Analysts say the interims at the end of this month should show higher profits. And Mr Benetton expects it to be out of debt by the end of the fiscal year.

No deals are in sight, but acquisitions are a possibility. "In a decade, perhaps we'll have 1,000 stores in China and India," he says, shrugging. "Ten years can pass rapidly."

Mr Benetton does not look at all like the customers in his new Oxford Circus shop. He is dressed formally but the casual touch is subtly present. He wearsa brown suit, but his button-down shirt collar is undone. His green tie features lambs jumping over stiles. Sheep are the order of the day at the new shop. It was opened in the morning with a pink sheep gambolling out of a pink limousine,bleating its way through the doors past the photographers.

Nor does 61-year-old Benetton fit the stereotype some Britons have of Italians. There are no rings on his sturdy fingers, and he does not gesture much. His hair curls in an untidy lion's mane, but is grey and thinning on top. He demonstrates an English-style middle-class reserve. He is warm and serious rather than passionate. That seriousness might come from his troubled childhood in Treviso, a walled townnear Venice. The Second World War began when he was five. Shortly after it ended, his father, who ran a car rental firm, died. By 15 he was working as a shop assistant for a clothier to support his widowed mother and three siblings.

"It was a tragic period," he says of the war. "You could say it was cruel. But you lived through it because you hoped things would change. The lesson I learned is that it was possible to fend for yourself. At 10 years old I was no longer a child."

His international clothing business began with a bright yellow jumper knitted for him by his sister, Giuliana, when he was 20. His friends admired it, and he realised it was saleable. He began to carry similar sweaters in Alla Campana, the store which employed him, and his sister farmed out the knitting to other girls in the neighbourhood. Then in 1960 he went to Rome for the Olympics and began to imagine something more than a cottage industry.

"I was struck by the distribution put in place to sell jumpers by Roman Jews," he says. "They had a direct relationship with their customers. They were not selling what suppliers gave them, but what their customers demanded." Much of the next four years was spent making contacts in Rome, buying knitting machines in Britain, and learning new manufacturing and management techniques. In 1965 he opened his first factory. He was as proud of the building's architecture as he was of the product. "The lighting came from the top and it had air-conditioning, thingsnot impossible for Italy but which you would not find in the old factories." Benetton's success was founded on basic patterns, low prices and quick shifts from one line of colours to another to keep up with fashion demand. "Our products were very simple," he says. "Our added value was the colours. It would be inaccurate to consider us designers; we are not part and parcel of the fashion world."

The first dedicated Benetton shop was opened in 1968 by one of his friends in the up-market resort of Cortina. It served as a showroom for his goods. Other friends followed. This led to an unusual corporate structure, neither wholly owned, nor jointly owned, paying no royalties to the manufacturer. "We didn't think of charging for it - we didn't even know about franchising," he says. "We obtain our profit from the sale of goods."

The company's market can perhaps best be described as the high end of the commodity clothing sector - the niche that in Britain is occupied by the likes of Marks & Spencer. The goods had to be top quality and inexpensive, but not flashy. For almost 25 years the strategy worked. But as the 1980s drew to a close, spiralling costs exacerbated by exchange rates pushed Benetton into crisis, though Mr Benetton denies it faced disaster.

Some companies with similar problems would have moved production to China, or, in classically European fashion, soldiered on until collapse. Mr Benetton chose instead to invest at home. Between 1994 and 1995 he invested $150m in two new automated plants capable of making clothes at prices that compete with the sweat shops of South-east Asia. Devaluation of the lira in 1992 also helped.

Benetton began expanding abroad in 1969 with a shop in Paris. It now operates in 120 markets. The broad geographical spread made consistent marketing of the brand difficult. Heavy red pullovers, popular in Britain, might not have gone down well in more temperate climes where light-green knits were in demand.

The solution was one of the most controversial campaigns in advertising history. Under the banner, United Colours of Benetton, there appeared first mixed-race couples and later more shocking images. One showed the bloodstained uniform of a dead soldier in former Yugoslavia. Others highlighted social problems such as Aids. None used professional models.

Mr Benetton is coy about whether his goal has been to change the world or merely to hijack topical issues to promote his brand. "I'm not the so-called `creative' person in the company," he says. But he does vet all the images before they go out. "Our principles are not to offend people and not to lie."

He is an active supporter of several charities, and has an interest in politics. From 1992 to 1994 he was a member of the Italian senate. But even though he says he has been accepted by Italy's elite, he is not part of it. He spends half the year on the road visiting his shops and has little time for Rome's society events. On the other hand, he says he has not faced any hostility. "We're not big enough to scare certain people."

Asked about his motivation for being in business he is somewhat more forthcoming. "I, too, reflect on this," he says. "I am very happy with the outcome from an economic point of view. But motivation can also be the pleasure of seeing a movie from the beginning through to the end." Benetton, then, is his feature film. There are also short films being screened in Mr Benetton's theatre. His family holding company, Edizione, has interests in a clutch of firms, from privatised banks to motorway service stations and supermarkets. And, of course, there is the Formula One racing team. "It was a unique experience," he says of his purchase of Britain's old Toleman team.

His first love, however, remains the clothing empire. "I am not interested in the others," he says, dismissively. And, after a brief spell in the pits, his life-long love is now roaring ahead. The new store, in what he diplomatically calls Europe's capital of capitals, is a sign of his determination to see the chequered flag.