Italian upholstery manufacturer Natuzzi has reported a growth in third quarter sales with both brands delivering a positive performance.
According to its latest Q3 trading update, total revenues amounted to €116.6m, an increase of 14.5% from €101.8m against the same period 2021.
Natuzzi Italia sales amounted to €42.7m, an increase of 15.1%, while Natuzzi Editions sales (including revenues from Divani&Divani by Natuzzi) amounted to €60.9m, an increase of 28.3%.
During the third quarter, the Group’s Shanghai factory carried out its operations with no COVID-related restrictions.
Delivered sales of upholstered and home furnishings benefitted from the reduction in the order backlog which is now “approaching to its standard levels”, the group said.
Net income was €5.4 million compared to a net loss of €3.6 million a year ago.
Pasquale Natuzzi, Chairman of the Group, commented: “We continue improving our operating model, as shown by the Ebit result of this quarter. However, the business environment for the whole economy and specifically for our industry remains challenging. The high inflation is reducing the disposable income of our consumers. This, together with a perduring uncertainty on the geopolitical and economic outlook, is leading consumers to postpone their decision to buy furniture.
“These dynamics have caused a weaker demand starting from April. We remain committed to our long-term growth plan, but we need to acknowledge the unexpected conditions of the market we are facing. I have the highest confidence in our CEO and our team to overcome the short-term challenges posed by the market to our turnaround.”
Meanwhile, Natuzzi has announced the appointment of Michele Ciani as a new senior manager, who will be responsible for the Retail Customer Experience for the Group. Natuzzi is continuing to invest to improve the organic growth of its stores reaching the level of retail excellence the company aspires to, with this appointment set to accelerate this process.
Antonio Achille, CEO of the Group, added: “Michele brings a wealth of deep retail knowledge and more than 20 years of experience within multination furniture retailers to help them sharpening their brand & story visual identity in Europe and China.
“Despite the adverse market conditions, we continued our retail journey: during the first nine months of 2022, we added 55 Natuzzi franchise stores, of which 43 located in China. This brings the total number of stores to 708, of which 51 DOS directly managed by the Group in addition to 24 DOS directly managed by our JV in China.
“The price adjustments, enacted in the first part of the year to contrast the rising trend in the cost of transportation, energy, raw materials and production inputs, are now almost entirely factorized in the top line and that have helped us protect our marginality from the continue pressure of cost on our business.
“In particular, the energy cost to run our industrial operations worldwide has increased by €2.8 million compared to the first nine months of 2021, mainly concentrated in our European factories. For instance, if we consider our factories in Italy, which represent almost half of the consolidated sales, the energy cost has increased by 140% in the first nine months of 2022.
“As for the remaining production costs, we are seeing a decreasing trend in the cost of leather, whereas the cost for fabrics and other materials, which absorb significant energy for their production, is still increasing. Transportation, costs are decreasing, especially for the long Asia-North America routes.
“In response to the tough market conditions, we have launched a set of actions to lower the costs of our G&A, tightly manage our working capital and protect our cash position.”
