An orderly succession is in prospect at Benetton

The co-founder of Italian fashion company Benetton has announced he will step down tomorrow, handing the helm of the family-controlled firm to his son.

Luciano Benetton and his family turned the company into one of Italy’s best-known brands, with more than 6,500 stores in 120 countries and a reputation for controversial advertising and bold colours, but it has struggled against competitors such as Zara and H&M.

“The baton passes to my son Alessandro, who will become chairman,” said Benetton, who turns 77 next month.

“After a run of 47 years, on Tuesday I will resign from the duties I hold in the company I founded with my siblings.”

Earlier this year, the family announced it would delist the company after a buy-out of minority shareholders.

In a newspaper interview, Benetton said his 48-year-old son, who has been deputy chairman for two years, had shown he had the passion needed to run the group, now more than 90 per cent controlled by the family.

The company, hit by rising prices of raw materials, especially cotton, as well as the economic crisis in southern Europe, last month said net profits for 2011 had fallen 28 per cent to €73 million (£60m) on sales that were down 1 per cent at €2 billion.

It is scrapping its dividend and warned that net profits may “fall slightly” in the year ahead.