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From Home Furnishing Business
Natuzzi S.p.A. Reports First Quarter 2023 Financial Results
June 5,
2023 by HFBusiness Staff in Business Strategy, Industry 
Natuzzi S.p.A., one of the most renowned brands in the production and distribution of design and luxury furniture, today reported its unaudited financial information for the first quarter ended March 31, 2023.
First Quarter Highlights:
~ 1Q 2023 Invoiced Sales Amounted to €86.1 Million, a Decrease of 27.4% Versus the 1Q 2022, Confirming the Headwinds of the Last Part of 2022. 1Q 2022, Which Reported Double Digit Growth vs 1Q 2021, Was the Last Quarter of the 18-Month Expansionary Phase That Started in the Aftermath of the COVID-19 Pandemic.
~ Branded Sales Amounted to €77.5 Million, 21.6% Below 1Q 2022. Branded Sales Were 92.3% on Total Sales In 1Q 2023, Compared to 86.8% in 1Q 2022.
~ Gross Margin of 35.6%, Compared to 34.3% in 1Q 2022. Net of the One-Off (€0.9) Million Accrual to Reduce Workforce Gross Margin Would Have Been Equal To 36.6%. 1Q 2023 Gross Margin Compares to 30.1% in the Pre-Pandemic 1Q 2019.
~ 1Q 2023 Operating Loss of (€0.9) Million Due to a Lower Operating Leverage Partially Offset By a €7.6 Million Reduction in the Operating Expenses. Net of the One-Off (€0.9) Million Accrual to Reduce Workforce, Operations Would Break Even.
~ Retail Expansion Continued in 1Q 2023 With 2 DOS Opened in the U.S., 1 DOS in JV in the U.S. and 1 DOS in JV in China as Well as 5 Additional FOS, of Which 3 in China, 1 in the U.S., and 1 in Australia.
~ Cash of €43.8 Million as of March 31, 2023, Compared to €54.5 Million as of December 31, 2022.
Pasquale Natuzzi, chairman of the group, commented, "Our sales results are not at the level we aspire to as we continue to face challenging market conditions and a more prudent approach by our customers, resulting in a weaker store traffic and reduced orders from large distributors.”
Globally our industry is transitioning from the expansionary phase, started in 2021, which created growth for the sector but also led to unprecedented over-stocking at the different level of the distribution value chain. The perduring of this economic scenario confirms the importance of the work that our team is doing to ensure a tight control on discretionary costs together with a more effective capital allocation.”
“We are confirming those investments which are pivotal for the execution of our mid-term plan, chiefly to support retail new openings and our factory modernization."
According to Antonio Achille, CEO, “Despite the negative economics context, we remain focused on our transformative journey to become a branded company, selling its products mainly through retail. While year-to-date order flow is below our expectation, it is worth highlighting that the branded portion of the business is above the level of 2019.”
“Furthermore, year-to-date written sales generated by our brands continue to increase their share on the overall business, 92% versus 90% one year earlier and 76% in the pre-pandemic 2019 same period.”
Achille continued, “We keep on expanding our retail network to accelerate growth, improve profitability and have a better control of the brand. Today we can rely on 710 Natuzzi stores, of which 382 are located in Greater China. During the first three months of the year, 3 new DOS opened in the U.S., namely, 1 Natuzzi Italia store in Miami, acquired from an historical franchisee, 1 Natuzzi Italia store in San Diego, and 1 Natuzzi Editions in Frisco operated in joint venture with a local partner.”
“Furthermore, a new Natuzzi Italia store, directly operated by our joint venture, opened in China. Lastly, we added 5 new franchise Natuzzi stores to our existing network, of which 3 in China, 1 in the U.S. and 1 in Australia.”
“We are progressing in actively seeking opportunities to sell those assets, mainly in the U.S., that are no longer in line with our strategic plans, and whose proceeds could be actively invested to increase efficiency in our industrial operations and add more DOS to our network.”
Achille concluded, “Our long-term plan remains the same; however, we need to recognize that for the industry the change of pace has been quite evident, and therefore we remain extremely vigilant to ensure a tight cost control and high financial discipline to navigate through the current headwinds."