MILAN (Bloomberg) — Benetton SpA, Italy’s largest clothing maker, said its top two executives resigned after clashing with the company’s founding family over plans for international growth.Chief Executive Officer Silvano Cassano, who had been at the helm for three years, and Financial Director Pier Francesco Facchini will step down and be replaced by “middle managers,” Benetton said yesterday. Shares of the Ponzano Veneto, Italy-based company fell more than eight percent, the most since March 2005.

The two are leaving as Alessandro Benetton, 42, the son of founder Luciano Benetton, prepares to take the chairman’s post from his father next year. Cassano will continue to serve on the board. Benetton said it plans to replace the two executives next year and hasn’t yet identified any candidates.

“It’s surprising that Benetton didn’t manage to strike an agreement with the executives instead of leaving the company in this management vacuum,” said Alessandro Frigerio, who helps manage the equivalent of $64 million at Abis Sgr in Milan. “It’s almost as though the family wanted to take things back into their own hands. I don’t think it was only about expansion abroad.”

The company also reported a 15 percent increase in third- quarter profit today. The Benetton family hired Cassano in 2003 to revive sales as competition intensified with Inditex SA’s Zara chain and Hennes & Mauritz AB’s H&M shops. Under Cassano, Benetton invested in retail stores, increased the average price of its products and boosted production outside Italy.

The stock declined 1.25 euros, or 8.1 percent, to 14.10 euros in Milan today, reducing the company’s market value to about 2.6 billion euros ($3.4 billion).

Benetton shares have still more than doubled since Cassano was named as CEO at the end of March 2003. He had completed a three-year reorganization set out in his mandate, the company said. The new CEO will likely be an “external candidate,” spokesman Federico Sartor said on the conference call.

“The divergence was related to different views on the second phase of international expansion,” investor relations director Mara Di Giorgio said on a conference call. “Mr. Cassano didn’t seem to be reluctant to these kinds of opportunities. The difference was probably over how to do it.”

Cassano’s successor will be charged with expanding outside Italy, particularly in Asia, according to the company.

Third-quarter net income at Benetton rose to 30 million euros ($38.5 million) from 26 million euros a year earlier, the company said in a separate statement. The median estimate of four analysts surveyed by Bloomberg was 31 million euros. Revenue climbed 6.3 percent to 474 million euros.

Benetton confirmed it expects to lift profit this year to about 130 million euros, or between 6.5 percent and 7 percent of sales. The company said it expects sales to rise about 8 percent, confirming the growth target it issued in September.

The Benetton family stepped back from hands-on management in 2003, when it decided to bring in professional managers and hired Cassano, a former Fiat SpA executive.

Alessandro Benetton, who is currently vice chairman, said in September the family is committed to the clothing maker and has no plans to sell. He said he expects the apparel maker, known for its colourful sweaters, to increase sales as much as 8 percent a year for the next decade as it opens factories and stores in China.