Italian furniture manufacturer Natuzzi has reported a decline in Q1 year sales as weaker demand saw a reduction in orders from larger customers.
According to its first quarter trading results ended 31 March 2023, total invoiced sales fell 27.4% to €86.1m against the same period last year. Branded sales amounted to €77.5m, down 21.6%, and represented 92.3% of overall sales, up from 86.8% in Q1 2022.
Natuzzi said that gross margin stood at 35.6%, up from 34.3%, while operating losses resulted at €0.9m due to a lower operating leverage, partially offset by a €7.6m reduction in operating expenses.
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.”
Antonio Achille, CEO, added: “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.
“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, three new DOS opened in the U.S., namely, one Natuzzi Italia store in Miami, acquired from an historical franchisee, one Natuzzi Italia store in San Diego, and one 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 five new franchise Natuzzi stores to our existing network, of which three in China, one in the U.S. and one 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.
“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.”
