15 March 2011 Last updated at 12:24 ET

Benetton warns of rising costs as profits slip

Revenue from Benetton's European stores fell in 2010

Italian fashion retailer Benetton has reported a fall in 2010 profits and warned the high cost of raw materials could hit profitability this year.

Net profit for 2010 came in at 102m euros ($142m; £89m) compared with 120m euros in 2009. Revenue was virtually unchanged at 2.1bn euros.

Revenue in Europe fell by 2.8% but all other regions saw growth.

It said raw material costs had risen in the final quarter of 2010, and would continue to hit the company this year.

"The strong growth in costs, especially of raw materials, will lead to a significant and progressive erosion of margins during the year," Benetton said.

The group also reported a fall in net debt, from 556m euros in 2009 to 486m euros last year.

Shares in Benetton fell 3.4% in Milan following the announcement.