• H1 profit fell to EUR30m from EUR40m
  • Revenues rose 1.7% to EUR 906m
  • Gross operating profit fell to EUR403m 

Higher cotton and wool costs, as well as a slowdown in demand in troubled Eurozone countries like Greece, have weighed on Benetton Group's bottom line, pushing the Italian fashion retailer to a 25% drop in first-half profit.

Rising prices are "severely impacting" product costs for the autumn/winter season in particular, the company said, noting that they were largely responsible for an erosion of margins.

First-half gross operating profit fell to EUR403m or 44.4% of net revenues, down from EUR425m or 47.7% of net revenues the year before.

Looking ahead, Benetton warned that high material costs "are set to continue in coming months."

It also said a "moderate slowdown" in spring/summer orders seems to be rebounding, and that autumn/winter indicates a return to growth.