Earnings call transcript: Natuzzi Q1 2025 reveals strategic shifts amid challenges

Natuzzi SpA reported its financial results for the first quarter of 2025, highlighting a revenue decline and strategic shifts in production. Despite challenges in consumer confidence and market conditions, the company is focusing on innovation and operational efficiency. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculation, though it has declined over 44% in the past six months. The stock price remained stable post-announcement, reflecting cautious investor sentiment.

Key Takeaways

• Revenue for Q1 2025 was $78.1 million, a 7.6% decrease year-over-year.
• Gross margin declined to 34.1% from 36.9% in the previous quarter.
• Natuzzi moved production from China to Italy, aiming to reduce costs and improve margins.
• The company closed three underperforming stores in Europe.
• Cash position improved significantly to $222.2 million.

Company Performance

Natuzzi faced a challenging quarter, with revenue falling by 7.6% compared to the same period last year, continuing a trend that has seen revenue decline at a 5-year CAGR of -4%. The company attributed this decline to ongoing production transitions and weakened consumer confidence, particularly in Europe. Despite these hurdles, Natuzzi is making strategic moves to strengthen its brand and improve operational efficiency, including a significant shift in production from China to Italy. InvestingPro data shows the company maintains a gross profit margin of 37.2%, though its overall financial health score indicates weakness.

Financial Highlights

• Revenue: $78.1 million, down 7.6% year-over-year
• Gross Margin: 34.1%, down from 36.9% previous quarter
• Operating Loss: €800,000
• Cash Position: $222.2 million, significantly up from $20,000 at year-end

Outlook & Guidance

Natuzzi is addressing a 10% US tariff on Italian products and exploring alternative production locations to mitigate these challenges. The company is also focusing on margin protection and expanding its contract and trade business. An e-commerce partnership is under discussion, which could open new revenue streams.

Executive Commentary

CEO Antonio Aquile emphasized, "We are still working in a market where consumers tend to postpone durable purchases." Pasquale Natuzzi Junior, Chief Trading Contract Officer, highlighted the potential of the trade business, stating, "The trade business in our retail fleet... is the future of our industry."

Risks and Challenges

• Production Transition: Moving production to Italy may lead to short-term disruptions but aims to improve long-term margins.
• Consumer Confidence: Fluctuating consumer confidence, particularly in Europe, poses a risk to sales.
• Trade Tariffs: The 10% US tariff on Italian products could impact profitability.
• Global Market Conditions: Ongoing geopolitical tensions, including the Russia-Ukraine conflict and Middle East issues, may affect operations.

Natuzzi’s strategic initiatives and focus on operational efficiency are crucial as it navigates the current economic landscape. The company’s emphasis on innovation and expanding its trade business could position it well for future growth, despite the immediate challenges.

Full transcript - Natuzzi SpA (NTZ) Q1 2025:

: You are now rejoining the conference.

Kevin, Conference Moderator: Quarter twenty twenty five financial results webcast. As a reminder, if you’d like to join via telephone, please dial +1 (412) 717-9633, then passcode three nine two five two one zero three pound. Once again, to join to join via telephone, please dial +1 (412) 717-9633, then passcode three nine two. Five two one zero three pound in addition to the link already provided to join via video. At this time, all participants are in a listen only mode.

Following the introduction, we’ll conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. Joining us on today’s call as usual are Antonio Aquile, Chief Executive Officer Pasquale Natuzzi, Executive Chairman Carlos Sevastri, Chief Financial Officer Mario De Gelato, Chief HR, Organization and Legal Officer. Furthermore, at the explicit request of the Executive President, Mr. Natuzzi, also joining us on today’s call are Pasquale Junior Natuzzi, Executive Director, Chief Trading Contract Officer Diego Babbo, Global Retail Division Officer Haldrin Corrama, Chief Wholesale Officer Daniele Trancini, Chief Marketing and Communication Officer Domenico Ricchiuti, Chief Operations Officer and Pietro Dorenzo, Investor Relations.

As a reminder, today’s call is being recorded. I would now like to turn the conference call over to Pietro. Please go ahead.

Pietro Dorenzo, Investor Relations, Natuzzi: Thank you, Kevin, and good day to everyone. Thank you for joining the Natuzzi’s conference call for the twenty twenty five first quarter financial results. After a brief introduction, we will give room for the q and a session. Before proceeding, we would like to advise our listeners that our discussion today could contain certain statements that constitute forward looking statements under The United States security laws. Obviously, actual results might differ materially from those in the forward looking statements because of risks and uncertainties that can affect our results of operations and financial condition.

Please refer to our most recent annual report on Form 20 F filed with the SEC for a complete review of those risks. The company assumes no obligation to update or revise any forward looking matters discussed during this call. And now I would like to turn the call over to the company’s chief executive officer. Please, Antonio.

Antonio Aquile, Chief Executive Officer, Natuzzi: Thank you, Piero. Let me start as usual to by sharing the highlight of the first quarter. We’re gonna be particularly brief since we want to leave more space. Piero, We need more space for a quality discussion with the management. As you see, we invited the core people from the organization.

So looking at the light, we closed the the quarter at $78,100,000.0, which is down from the last year by 7.6%, and we’re gonna be commenting the specific reason for this short fall of revenue in addition clearly to a very challenging market condition. Gross margin was down to 34.1 compared to 36.9 of the previous quarter. We will elaborate on this because it’s particularly important. The primary reason is because in the first quarter, we had a transition phase, which was planned, of the shift of production for Natuzzi Edition for the North America from China to the Italian market. I will elaborate later on why this contributed for a slight decrease in margin this quarter.

So the combination of revenue below what we need from scale and margin led to a loss in term of operating loss of €800,000 in the quarter. Net financial costs were 2.9 compared to 2.2 of the previous quarter or the or the quarter of the previous year, mostly due to currency movement. As you know, the currency has been particularly volatile in the first quarter. Despite all the this element, we continue investing roughly 2,000,000, primarily on the factory side. In term of cash, we closed the quarter with $222,200,000.0 in cash, slightly above from 20,000,000 at the end of the year.

On this regard, it’s important to notice that this was also the quarter where we completed the transaction of High Point, which contributed to the cash position. We will have, you know, plenty of opportunity to discuss with you what we’re experimenting as an industry, as I would say, global stickiness of the world as well in a market that continue to be clearly very challenging. I don’t, let’s say, expand on this element because it’s obvious, the reason why I’m doing this statement. I was just reading the data on consumer confidence, the board confidence for US, which went back to the beginning of 02/2023. I also saw the data for Confident Europe, which are down 3.1 percentage point.

So it’s quite evident that we are still working in a market where consumer tend to postpone durable purchases. So as I mentioned, I keep it very short, daylight. I will return later to comment some of these element. Let me now pass to Pasquale for an overview of the commercial achievement in the quarter.

Pasquale Natuzzi, Executive Chairman, Natuzzi: Well, good morning, everyone. Just for everyone information, I’m, you know, I’m okay. I’m Pasquale. My position is operative president. So in other word, I’m working together with our CEO, you know, to to put all my experience, you know, at the company disposal considering the situation, I mean, which is complicated.

No question about. I mean, you know, the the business environment, it’s very, very difficult. So because I have the commercial responsibility, I’d like just to recap what I wrote on my press release in order to to stimulate question, which, you know, would be very welcome from all of you shareholder, analyst, or bankers, whoever. And that’s why also I invite the channel director like Diego Babbo. Diego Babbo has responsibility for the retailer channel.

And Codrin as responsibility for wholesaler channel and as well as junior and the as the trade and contract responsibility. While Daniele Trinckini is our chief marketing officer. Again, I will read whatever no. Whatever. What I wrote on the press release just, you know, to remind everyone or to stimulate everyone to ask eventually any question.

And the and the channel director, marketing director, that’s why they have been invited here to answer to any of your questions because they have been very much involved in all the activities that we have been implementing. So no question about the market in which we operate have not shown those sign of improvement that we expected. The business environment has been further affected by the introduction of United States trade duties on April, the pursuing Russia, Ukrainian conflict, and more recently, the escalation of tension in The Middle East. In this contest, we have intensified our effort to support commercial deployment. We continue to implement our brand commercial strategy that integrates collection, 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 rollout. This year, market our return to the Salon del Mobile Fair in Milano after five years absence that consider coincided with the pandemic and post pandemic period. At the Milano Fair, we unveiled the new Natuzzi Editions collection, Fidwell, Dolce Vita, and Neo Heritage. During the Milano Design Week in April, we have also presented the Natuzzi Italia Comfortanes and Circle of Harmony Collection, which reflect our evolution in the global lifestyle brand. True to our heritage, Natuzzi Italia collection have been enriched through collaboration with international designers such as Andrea Stale, Karim Rashid, Marcantonio, and Marco Liparine.

Mauro Liparine. Sorry. For both Natuzzi Italia and Natuzzi Editions, the new collection has been supported by tabloid, high quality marketing campaign, which I’m sure if you want to have deeper information, Daniela will give you plenty explanation. We have worked to support an innovative the three channels in which we operate, retail, US and franchising, gallery, and the newly established contract channel. In retailer, we have made significant investment to improve analytics and intelligence.

We have a built infrastructure to monitor store performance in real time, focusing on key indicators such as food traffic, conversion rate, average ticket, and product category performance. This enable a data driven diagnostic of each store across our network with the objective of progressively improving the performance of our retailer. The Ray Magine Ray Magine’s gallery format that was introduced last year, late last year, has become operational in the first quarter two thousand and twenty five. While still in this early stage, it has started to show some initial sign of a positive positive impact, both in terms of new opening and remerchandising, particularly in United States. Following the launch of Natuzzi Admony Residence in Dubai last November, we are seeing early signs of growing interest in our contracted division and have an area we consider having significant growth potential and strategic relevance for our group.

Pasquale Junior Natuzzi will give you all the explanation you need. Our immediate focus in the full and effective deployment of this strategy in our main market, we have prioritized the initiative aiming to strengthen sales and engagement across all region. Although, therefore, impact will depend on market dynamics and execution over time. Lafuzhou America remain a strategic priority. We have implemented a new organization with the appointment of new vice president retailer, Justin Christensen, and the new vice president human resource, McCountry, who will focus on improving our retailer and commercial operation.

Justin has over twenty five years of experience in the retailer industry, particularly in fashion, having worked with European and American fashion group, which include Brioni and Ralph Lauren. Sherry, with over twenty years of experience, has held the position of a vice president corporate human resource at Louis Witton and human resources director at William Sonoma. In Europe, we have taken direct control of our largest market, United Kingdom, by appointing the new country manager, Antoine Nicolai, to lead the commercial development for both the retailer and wholesaler channel. Antoine brings over ten years of experience in the luxury and consumer goods. In Italy, the recently appointed country manager, Roccarella, is contributing positively to improve the quality of both our direct and franchising distribution.

In China, we have worked closely with our local JV team to enhance the quality of our retail network and strengthen brand presence. In July, we will present a new Natuzzi Italia collection to our dealers, replicating the Milan Design Week format at the local level. Our new collection have generated interest among both existing and prospective clients, leading to commitment to open new gallery in France and in Germany. We believe that the step we have taken on collection, marketing, marketing, and retailer management represent a solid foundation for improving our commercial performance over time. Our objective remains to strengthen the brand and remains operational efficiency with the aim of delivering sustainable value for our stakeholder.

However, the actual result will depend on market condition, consumer sentiment, and the effective execution of our strategy. That’s the reason why I got involved the direct channel director and also the marketing director. If you have any question, we’ll be very pleased, you know, to give you all the explanation, Willie. Thank you.

Kevin, Conference Moderator: Antonio, would you like to open up for questions now? If you’d like to ask a question at this time, please use the ask a question feature on your screen at this time to be placed into question queue. Once again, if you’d to ask a question at this time, please use the ask a question feature. Our first question is coming from David Keenan. Your line is now live, sir.

Antonio Aquile, Chief Executive Officer, Natuzzi: Dave, I’m afraid you’re on mute. Or or I don’t know if you’re Kevin, can you help David to unmute? I don’t know if he’s Hang on one second. Locally or or or your manager.

Kevin, Conference Moderator: Kevin, your line should be open, my friend. Go right ahead and please ask your question.

David Keenan, Analyst: Okay. My apologies. Are you able to hear me now?

Kevin, Conference Moderator: Yeah. Please go ahead, David. Yes.

Diego Babbo, Global Retail Division Officer, Natuzzi: Yes. Yes. Okay.

David Keenan, Analyst: In the prepared remarks, you highlighted that you moved production for various reasons out of China and over to Italy, and then that caused some disruption in gross margin. Furthermore, you explained that you enacted a price increase of 10%. So last quarter, q four gross margin was 38.1%, so we went backwards about 400 basis points. With the moves now completed, should we expect a return back to the 38% level, assuming we’re doing 75 to 80,000,000 a quarter. Is that a good assumption, or it’s gonna take some time?

Antonio Aquile, Chief Executive Officer, Natuzzi: So it’s definitely something we want to manage. As you know, since April 2, which is after this quarter we’re just commenting, the administration also introduced a 10% out of yeah. Can you can you partially mute, David? There is a return in the voice. So after this quarter, which are commenting, the US administration also introduced a duty of 10% from, for product exported from Italy.

So we are definitely reviewing also this aspect in light of, the September, which was, the September, which was the deadline anticipated by the administration, American administration to potentially review this duty because, absolutely, we want to take all the measures to reinforce the margin, especially for this component. In addition, as an anticipated in the press release press release, we’re also considering more sustainable production location for Natuzzi Editions for North America. We know we we have, as you know, factory including Romania. Any movement of those production need to be clearly considered in the light of the rigid precondition we have in term of agreement with the public institution and the contract in Vitalia. So the protection of margin, it would be pursued with two actions.

Short term, we’re gonna be reviewing our, let’s say, price list, also in consideration of the duty which has been introduced and would be most likely confirmed. More midterm, we are, also considering potentially allocation of the production for an oxidation outside Italy, but this is something which need to be concentrate consultated also with the, local institution beyond as an industry as in in in industrial, transition carefully be planned from an operational standpoint. In case you want to add, which is a very important element, more context of the, constraint and the preexisting agreement, is the best person in this team to provide them.

David Keenan, Analyst: Okay. So my question is, in q two and for the balance of the year, notwithstanding, yes, it looks like there’s gonna be a 10% tariff from product coming in from Italy unless Trump makes a special deal with Miloni. They seem to get along pretty well, but we’ll assume 10%. So should I continue to assume that gross margin will remain at the 34% level in q two and beyond, you know, with with the tariff, let’s say, landing at 10%, or will it improve with with the price increase and some of the moves? That’s what I I I I don’t feel like I got a clearance.

Antonio Aquile, Chief Executive Officer, Natuzzi: It’s it’s a central question. As you know, we don’t provide specific guidance in these figures, not also because they are result of a complex algorithm where there is price realization, product mix, production cost, material. So we don’t provide specific guidance. What I can reassure you, at least, in my capacity of, CEO, that we’re gonna be very determined in readjusting the marginality on Natuzzi Edition towards North America in light of also the tariff. We need to protect our margin, because the tariffs don’t depend on us as an industry standard.

So, definitely, we’re gonna take price adjustment there. In term of price or production product production allocation is a more structural move, but also there, the company is very serious about having a discussion with the government to, face some of the historical constraint that prevent a more effective allocation for this production.

David Keenan, Analyst: Okay. And then operating expenses for the quarter were down, to 27,400,000.0 in q one. So had you done 38% in gross margin, you would have actually had almost a $3,000,000 operating profit, 2 and a half to $3,000,000. So that’s why I’m focusing on margin. That reduction in operating expense of 20 to 27,400,000.0, is that sustainable?

I know there’s some variable costs, specifically transportation, commission, etcetera. But assuming all things equal, let’s say 78,000,000 with the same mix more or less in revenue, can you maintain that, 27,400,000.0 operating expense level, or there was something anomalous that drove it lower?

Antonio Aquile, Chief Executive Officer, Natuzzi: So I’m gonna be refree going back to your question to make sure I answer in a correct way. Provided the scale is this one we are discussing because, of course, there’s a matter of absorption of those expenses. I have good confidence that we are on a good track to reduce operating expenses. We’re also doing a contingency. We just discussed and implemented with our CFO here a contingency on all discretionary expenses.

We launched with Domenico here and his procurement team an effort to review the cost of our purchase of material transportation. So provided the scale and the mix, which was in your opening question, stay at the level we are witnessing today, I have confidence that the expenses will go down in percentage. They will go down in absolute term. It’s a method also then to maintain or increase the scale of the to witness also a reduction in percentage.

David Keenan, Analyst: Okay. And then, mister Pasquale called out some of the changes that you’ve made in your new, I guess you would call it, software or technology platform to track retail locations, and he said something like you’re seeing early signs of improvement. Could you just speak to that a little bit, what these differences are, and when did you see this improvement, and how profound is it?

Antonio Aquile, Chief Executive Officer, Natuzzi: I’ll let Pasquale comment on this.

Pasquale Natuzzi, Executive Chairman, Natuzzi: You sincerely, I I mean, I don’t I mean, the communication is not really the best one here, and I’m I’ve understood what David said. Can you repeat, please, David, again?

David Keenan, Analyst: Yes. Mister Pasco miss mister Natuzzi, you had said that you had implemented some changes in terms of, I’m assuming, technology information flow between headquarters and your retail locations. And this new platform you said is showing early signs of improvement. I believe you said that both for the commercial unit, the new commercial unit, as well as your North American retail. So if you could explain what some of these changes are, you know, before and after, what it was like before, and the magnitude of the improvements that you’re seeing and why.

Just give us more color or depth on on, you know, these early signs of improvement.

Pasquale Natuzzi, Executive Chairman, Natuzzi: Okay. Alright. So, you know, I I asked Diego Babbo. Diego is our retailer director, so he will give you explanation about that. Okay?

Diego.

Diego Babbo, Global Retail Division Officer, Natuzzi: Yes, David. Well, actually, mister Nazzusi is referring to the fact that we have, let’s say, institutionalized a robust process of ongoing performance assessment with Actionable Insight translating into precise and timely action plan. This is part of our culture of continuous improvement, which has allowed us to swiftly address underperforming categories and capitalize on emerging opportunities. We are based on that software platform, which is the the Power BI platform, which is allowing us on a rolling basis to look at the, every single store, not only directly operated, but also including all our dealer that decided to join our system, which are more and more, embracing the idea. And we are now able to really make a sounding business decision based on facts and figures as was a practice probably in most of the retailer, advanced retailer, but not very much in our industry.

We have I have to say we achieved a good threshold and a good level of excellence in that. Through that, by the way, to give you some color, a corner store of our progress in that lies also in our remerchandising strategies, which has been measured through the system. And in terms of meticulously analyzing the behavior of consumer and in store dynamics through the system, we have refined our product place and the visual storytelling, making our showrooms, let’s say, more engaging and and effective in driving conversion. It’s a data driven approach that is paired with a nonsense performance analytics that somehow has empowered our teams to anticipate market trends consumer needs with greater agility. To give you just a couple of examples, by looking at these trend in our store, we have seen we have been able to set action plan in order to try to offset what has been a quite strong decrease in traffic, let’s say.

And the the key factor indicating the decline in store traffic has been the dedication and professionalism of our store staff who have benefited from target training program. This has been achieved by using the system measuring results, offsetting the the decline in traffic, also mostly in US through three main pillars and actions. One, as PJ could be eventually commenting more than me, is the fact that we are addressing the trade business through the architect in our store, which is now part of our, let’s say, double check activity through our software, which has achieved considerable results. Mostly in US, we have stores where we are exceeding 25, 30% of our business made through the trade business. And, through the system, we also, implement action in order to improve the conversion rate of the fewer customers that get in b to c and consumers that get into our stores together with action that protect the average ticket of our store.

So everything is now, let’s say, putting on a rolling basis in in the in the system, which is also strengthening our internal collaboration, integrating feedback loops between retail operations, merchandising, and supply chain to ensure optimal execution at every level.

David Keenan, Analyst: Okay. I’m gonna go back into queue in case someone else would like to ask questions. But I have a request, Antonio. If you would be kind enough to make an introduction to Justin Christensen, the new North American retail VP, I would appreciate that.

Antonio Aquile, Chief Executive Officer, Natuzzi: Sure. Thank you. We will put you in contact with our local team.

Diego Babbo, Global Retail Division Officer, Natuzzi: Absolutely. Thank you.

Kevin, Conference Moderator: And once again, ladies and gentlemen, if you’d like to ask a question at this time, please use the ask a question feature on your screen. Once again, if you’d to ask a question at this time, please use the ask a question feature on the screen. We’re just gonna pause for further questions at this time. Once again, if you have any questions, you could use the ask the question feature on your screen. David, there are no further questions at this time.

You can proceed with any further questions you may have, my friend.

Antonio Aquile, Chief Executive Officer, Natuzzi: So if there are no other question, why maybe people

Kevin, Conference Moderator: For David. Have David. David’s on, but I just

David Keenan, Analyst: you sound okay. Okay?

Antonio Aquile, Chief Executive Officer, Natuzzi: Please, please. Otherwise, I would have moved to commend the figure more in the day with Carlo. Please, David.

Kevin, Conference Moderator: David, can you hear me, my friend? I’m just gonna make sure you’re unmuted.

David Keenan, Analyst: Okay. Thank you. So my my last question is on the commercial division. Also, you called out that you’re seeing early signs in that business. If you could, you know, give us an update.

Is longer term? What is the potentiality of the size of that business? And any color that you can give us in terms of the early signs that you’re seeing now that are encouraging.

Pasquale Natuzzi, Executive Chairman, Natuzzi: No. Actually I’m not sure

Pasquale Natuzzi Junior, Executive Director, Chief Trading Contract Officer, Natuzzi: if you’re referring to are you referring to the trade the projects business, the trading contract business?

David Keenan, Analyst: Yes. Is that what is that not what you call the commercial division, like selling to hospitality?

Kevin, Conference Moderator: We call it I think that’s the

Antonio Aquile, Chief Executive Officer, Natuzzi: reason why the team was a bit fuzzled. We call it the contract. No. Commercial is all the division. Contract is what we refer more with this, let’s call it, b two b or b two b c opportunity, which is led by PJ.

PJ, I believe you are the one best suited to address the the question. Please go ahead.

Kevin, Conference Moderator: So,

Pasquale Natuzzi Junior, Executive Director, Chief Trading Contract Officer, Natuzzi: mister David, as you well known, we we’re overseeing for sure, first of all, a phenomena which is pretty positive on one end for consumers, which is, you know, the the growth and the extended, let’s say, lifespan of furniture products that is growing. And that is called is causing, as a matter of fact, a significant, you know, a slower pace in in the repurchase cycle for consumer. That’s a phenomenon that we’re somehow looking at on the retail side. Then if you consider macroeconomic pressures that we’re all feeling, clearly, impacts, like Antonio was opening in his remarks, it’s it’s it’s it’s definitely impacting consumers’ confidence and purchase intention. Now there is we are seeing there is a shift in our retail business model.

There is a some somehow hybridization of what was a b to c purely type of commercial dynamic into a b to b to c, model, where the business to business is represented by the relationship with the design community, which is what I’m looking and overseeing with the what we call trade and contract division, which is a team and a business unit that overlooks on two, let’s say, business trajectories. On one end, we do develop and deliver bespoke solutions to hospitality operator, hospitality and entertainment, commercial, residential, not to mention, of course, bespoke solution in the in the residential field, of course, which is which is very important. So that is what we call contract is bespoke, and it’s what also gave life to the incredible best practice of the Harmony Residences in Dubai, which was a a relationship, let’s say, an opportunity built over over a relationship started with a real estate developer based in Dubai, and that is now being replicated in different geographies of the world that are adding, you know, onto the opportunity of Dubai by opening up to new opportunities of branded residential. On the other hand, we are also in parallel improving the organization by ensuring commitment and discipline growth with design leadership, bespoke project development, integrated customization, and leveraging, of course, of the Natuzzi controlling of retail, but also leveraging of the Natuzzi supply base for whatever that is more related to retail.

So the trade business in our retail fleet is what I also overlook at supporting Diego and his retail teams with a with a, let’s say, a dedicated set of skills, guidance, and tools to promote the business with designers, architects, or even, you know, developer and hospitality operator in all of those adjacent areas where our retail network lies today. And here, we’re seeing that, of course, there’s there’s some market research of which one is I want to quote. It’s it’s ThinkLab US who, you know, reported that the average power of a design studio in America is 40 times higher than an average American consumers. And the top 200 design firms in America have 140 times the spending power potential of an ever on a of an average American consumer. So you can understand that this business to business relationship has much more loyalty and potential than whatever we were going after on the b two c side of our retail business.

So let’s say consider the trade and contract division as a business unit that on one end is is trying to leverage on our global retail network, trying to have localized type of relationship or sentinels, business procurers that do grasp, hear out for opportunities of any sort of development in their areas, and they relate to our corporate team, which is a team that I started up over the last year and that does, in effect, contract and bespoke solutions. But then we have our stores. Like Diego said, there is locations today in which implementing and focusing, especially in America where the potential is definitely the highest, these locations where we’re focusing on consider every Monday, I speak to overall to the overall American trade teams of the world in each and every locations, And we are seeing an incredible growth where, like Diego said, some stores reached 30% and even more of a share of voice of trade sales in their stores, which is sales where, of course, it’s not just delivering the design service, but it’s also harvesting the relationship with design professionals, which will allow us to have loyalty and long lasting b to b kind of connection with these design professionals.

So to be frank, I do believe that this is the future of our industry. I also sit in the board of director of the Italian National Furniture Association, which also owns the Salone del Mobiles Furniture Affair. And all of the peers and competitors or colleagues that we have on the international level, they all are seeing incredible results by pursuing the world of contract, projects, and trade. Because in these period of times, working, you know, once again with design professional, being specified by contractors, becoming loyal suppliers for big hospitality operators is what can mine the gap of what the global economy is unlikely showing to affect today.

David Keenan, Analyst: Okay. Thank you for that commentary. Last question. I had made an introduction, Antonio, to probably the largest home furnishings ecommerce company, and, I believe it was something that you were gonna get stood up. How could you give us an update on that when you expect to launch and, give us an update there?

Thank you.

Antonio Aquile, Chief Executive Officer, Natuzzi: I I will pass it to Codrin who has been the person implementing this opportunity.

Codrin Corrama, Chief Wholesale Officer, Natuzzi: Thank you, Antonio. David, thank you for the question. So we are we have met quite a few times. They have visited us during Milano, during Salon del Movile. We’ve had great time together.

We have also met again. They have followed up with a meeting in High Point Market in October, and we are now in the going through some technicalities in tie in in terms of finding the common ground in in moving forward, technically speaking. I will also be meeting with their executive leadership team in Florida where they have a congress upcoming in in September. We are confident that we will be able to positively conclude discussions by the time we meet in September in Florida. So first and foremost, thank you for bringing this opportunity forth.

We’re working on it, and we’re cautiously optimistic about moving forward in a positive way.

David Keenan, Analyst: Okay. Thank you, guys.

Antonio Aquile, Chief Executive Officer, Natuzzi: Thanks to you.

Kevin, Conference Moderator: Thank you, David. And there no further questions at this time. I’d like to turn the floor back over for any further or closing comments.

Antonio Aquile, Chief Executive Officer, Natuzzi: So in closing, maybe as typically we do, Carlo, you want to Carlo and Pierre, you want to highlight, some of the key dimension of the quarter as as reported, even those I believe most of the audience is a well educated audience which had the opportunity to review. Yeah. Maybe Antonio will With figures, please, if you want to provide any commentary on the performance and more on the economic side. I meant Yeah. I

Diego Babbo, Global Retail Division Officer, Natuzzi: will go.

Carlo Sevastri, Chief Financial Officer, Natuzzi: Thank you, Antonio. Do you hear me well?

Antonio Aquile, Chief Executive Officer, Natuzzi: Yeah. We do.

Carlo Sevastri, Chief Financial Officer, Natuzzi: Yeah. Thank you, Antonio. I will provide a couple of comments that maybe, it’s worth to underline again, related to our performances, why we have been discussing about the gross margin, given the situation in both channel mix and, let’s say, between the retail and wholesale and the new, let’s say, production allocation. What is maybe worth to be, let’s say, confirm is that in the other industrial cost, we see a decrease, from 4,900,000 to 4,400,000.0. So we have a saving of half a million euro given as a result of a lower, related depreciation following the closure of all of our Shanghai plant and the move, to the new plant of Punjao.

So this is a saving that will, you know, it’s, it’s in our, p and l as a result of this transition process. Then going back to, you know, the selling expenses and while we exceed an overall increase in the transportation cost as a result of higher tariff of Italy, North American shipping route. On the other side, we have benefited of 800 k, US euro saving, given this new industrial location. So we’ve lowered deliveries from China. So this is like a a class of, you know, all the process we are going through in terms of, you know, industrial location.

And, adding on the question of mister Kennen, we need to confirm that we had closed in two thousand twenty four three nonperforming stores, one in Spain, one UK, one in Italy. And this is benefiting us with, 700,000 US dollar saving in selling expenses. So, these are, data that confirm that our active portfolio management is indeed, giving benefit to our, p and l. On the other side, when, let’s say, some few remarks on our financial cost, While we are seeing the impact of the decrease of the interest rates, that is reflected in financial cost from, 2,600,000.0 last year to 2,200,000.0, We have been, overweight by our overall currency movements on the trade receivable and payables. So we did not have any, you know, change in our hedging policy.

This has been basically the results of the floating and, you know, unpredictable exchange rate of the US dollar in, in the first quarter that has brought us 1,000,000 loss compared to 200,000, you know, profit, last year. So these are, let’s say, something on top of what we have fully described in our press release.

Antonio Aquile, Chief Executive Officer, Natuzzi: Okay. Thank you, Carlo. Kevin, I believe if there are no further question and as always, we also welcome the audience to reach us separately after the individually after the competition of the call. I believe, Kevin, if there are no further question, we can thank the audience on behalf of Natuzzi. I also thank Pasquale and and all the team who joined us today, and we can close the the meeting.

Kevin, Conference Moderator: Thank you, and thank you, everyone, for joining us today. That does conclude today’s webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

Antonio Aquile, Chief Executive Officer, Natuzzi: Thank you all.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.