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Has Benetton Stopped Unraveling?

Its new boss plans sweeping changes, and investors are happy

Remember those controversial ads from Italy's Benetton? There was the one with a nun and a priest kissing, and another showing a long-haired, gaunt, Christ-like AIDS sufferer on his deathbed. Those provocative images, with their pointed social messages, helped turn Benetton's colorful sweaters into a casualwear empire in the 1980s, creating one of the world's best-known brands.

But edgy publicity campaigns were no protection against a handful of savvy European rivals who began revolutionizing the apparel business in the 1990s. "We didn't take advantage of the quick transformation" of the industry, says Silvano Cassano, a former Fiat manager who on April 1 became the Benetton Group's chief executive.