Natuzzi S.p.A. Reports Financial Information for First Quarter 2025

July 6, 2025  by Karen Parrish in Business Strategy, Industry   

First Quarter Highlights

- Total net sales amounted to €78.1 million, down 7.6% from €84.5 million in 1Q 2024.  

- Gross margin was 34.1%, compared to 36.9% in 1Q 2024, primarily due to the transition phase of the planned production shift of Natuzzi Editions for the North American market from China to Italy.

- In 1Q 2025, we had an operating loss of (€0.8) million, compared to a profit of €0.6 million in 1Q 2024.

- Net finance costs were (€2.9) million, compared to net finance costs of (€2.2) million in 1Q 2024, also due to unfavorable currency movements on trade receivables and payables.

- During 1Q 2025, we invested €1.9 million, primarily to upgrade the Group’s Italian factories.

- As of March 31, 2025, we held €22.5 million in cash, from €20.3 million as of December 31, 2024. Proceeds from extraordinary transactions, notably the sale of the building in High Point, more than offset operating cash outflows.

- Store traffic and written orders are below expectations, due to a generalized decline in consumer confidence. This may adversely affect our results of operations at least in the first part of the current year, subject to the Cautionary Statement included herein.

Pasquale Natuzzi, executive chairman of the group, commented, “The markets in which we operate have not shown those signs of improvement we expected. The business environment has been further affected by the introduction of U.S. trade duties on April 2nd, the perduring Russia-Ukraine conflict, and, more recently, the escalation of tensions in the Middle East. In this context we have intensified our efforts to support commercial deployment."

"We continue to implement our Brand commercial strategy that integrates collections, marketing and customer experience, while closely monitoring its effectiveness in a challenging market environment. The brand guidelines have now been centrally codified to accelerate their global and consistent roll-out."

"This year marked our return to the Salone del Mobile Fair in Milan, after a five-year absence that coincided with the pandemic and post-pandemic period. At the Milan Fair, we unveiled the new Natuzzi Editions collections: “Feelwell”, “Dolcevita”, and “Neo Heritage”. During the Milan Design Week, we also presented the Natuzzi Italia “Comfortness” and “Circle of Harmony” collections, which reflect our evolution into a global lifestyle brand, true to our heritage. Natuzzi Italia collections have been enriched through collaborations with international designers such as Andrea Steidl, Karim Rashid, Marcantonio, and Mauro Lipparini. For both Natuzzi Italia and Natuzzi Editions, the new collections have been supported by tailored, high-quality marketing campaigns."

"We have worked to support and innovate the three channels in which we operate: Retail (DOS and FOS), Galleries, and the newly established Contract channel (B2B opportunities)."

"In Retail we’ve made significant investments to improve analytics and intelligence. We have built the infrastructure to monitor store performance in real time, focusing on key indicators such as foot traffic, conversion rates, average ticket and product category performance. This enables a data-driven diagnostic of each store across our network, with the objective of progressively improving the performance of our retail."

"The Re-imagined Galleries format, that was introduced late last year, has become operational in 1Q 2025. While still in its early stages, it has started to show some initial signs of positive impact, both in term of new openings and remerchandising, particularly in the U.S."

"Following the launch of Natuzzi Harmony Residence in Dubai last November, we are seeing early signs of growing interest in our Contract division—an area we consider having significant growth potential and strategic relevance for our Group."

"Our immediate focus is the full and effective deployment of this strategy in our main markets. We have prioritized initiatives aimed at strengthening sales and engagement across all regions, although their full impact will depend on market dynamics and execution over time."

"North America remains a strategic priority. We have implemented a new organization with the appointment of a new VP of Retail, Justin Christensen, and a new VP of HR, Sharri McIntyre, who will focus on improving our retail and commercial operations. Justin has over 25 years of experience in the retail industry particularly in fashion, having worked with European and American fashion groups which include Brioni and Ralph Lauren. Sharri, with over 20 years of experience, has held the position of VP Corporate HR at Louis Vuitton and HR Director at Williams-Sonoma..."

Pasquale concluded, "... We believe that the steps we've taken on collections, marketing, and retail management represent a solid foundation for improving our commercial performance over time. Our objective remains to strengthen the brand and enhance operational efficiency with the aim of delivering sustainable value for our stakeholders. However, the actual results will depend on market conditions, consumer sentiment, and the effective execution of our strategy.”

Antonio Achille, CEO of the Group, commented, “The first quarter was impacted by growing geopolitical tensions and persistent economic uncertainty that impacted consumer confidence..."

"...In October 2024, we completed the closure of our historical manufacturing plant in Shanghai. We made this decision as Shanghai no longer offered competitive labor and production costs. The Shanghai plant had served the domestic Chinese market, North America, and key countries in the rest of Asia for Natuzzi Editions. Our new facility in Quanjiao has been designed to serve exclusively the domestic Chinese market. We made the strategic decision—confirmed by the recent geopolitical outcomes—not to include North American production at this site, given the growing trade tensions between the U.S. and China..."

"The decision to reshore Natuzzi Editions production to Italy has been taken based on a thorough feasibility and sustainability study at Group level. This analysis assessed the potential benefits of the initiative, and the most significant ones include:

- The suspension of indirect and operating expenses related to the Shanghai plant, associated with Natuzzi Editions production for the North American market;

- The avoidance of import duties;

- Reduction in production costs at the Italian plants, driven by higher capacity utilization resulting from increased volumes;

- The mitigation of labor costs related to underutilized workers in Italy, who—due to current social support mechanisms—would otherwise have represented a negative cost impact..."

"We have engaged, together with the Company’s Operations and HR leadership, to address the specific issues arising from this production reallocation. More broadly, we have launched an improvement program to implement solutions aimed at enhancing quality levels, service, and production costs, especially at the Italian plants."

"As Italy remains structurally more expensive than other production hubs—particularly in terms of labor—we are engaged in constructive dialogue with Italian institutions to address labor market challenges and ensure long-term sustainability—we remain open to exploring alternative solutions to make Natuzzi Editions production for North America structurally more viable."

"The uncertainty surrounding U.S. trade duties poses a significant challenge for the entire industry, especially for companies like ours with deep commercial ties to the U.S. market, as it has created a volatile environment in which consumers and retailers tend to postpone their purchasing decisions."

"In light of persistent economic and geopolitical uncertainty, including the recent escalation of the conflict in the Middle East, we anticipate continued market volatility. We are therefore adopting a disciplined, risk-aware approach in planning for the coming quarters.”

To read the complete shareholder's letter and see the financial results, visit this link.