Natuzzi SpA Q1 FY2025 earnings call

• Challenging market conditions including U.S. trade duties, Russia-Ukrainian conflict, and Middle East tensions affected the business environment.
• Returned to the Salone del Mobile Fair in Milano after 5 years, unveiling new collections like Natuzzi Editions' Feelwell, Dolce Vita, Neo Heritage, and collaborations with international designers.
• Invested in retail analytics and intelligence, built infrastructure to monitor store performance. Reimagined gallery format showed early positive impact, especially in the U.S.
• Contract channel showed early interest with Natuzzi Harmony Residences in Dubai, and focus on strengthening sales across regions.
• Brand guidelines codified for global and consistent rollout, and support for 3 channels (Retail, DOS/franchising, Galleries, Contract) with tailored marketing campaigns.

The company closed the first quarter with revenue of EUR 78.1 million, a decrease of 7.6% from the previous year. Gross margin was 34.1% compared to 36.9% in the previous quarter. The primary reason for the gross margin decline was the transition phase of production for Natuzzi Editions for North America from China to the Italian market during the quarter.

• Management is reviewing price lists in consideration of U.S. tariffs introduced and potential production shifts for Natuzzi Editions for North America to protect margins.
• No specific guidance on future margins but intent to reinforce margins through price adjustments and careful production reallocation, considering market dynamics and execution over time.

• U.S. trade duties on products from Italy which could impact margins.
• Volatile currency movements leading to higher net financial costs.
• Challenging market conditions with consumers postponing durable purchases, affecting revenue and sales.

Q: Regarding the gross margin decline and if we can expect a return to previous levels, A: Discussed reviewing price lists, U.S. tariffs, and potential production reallocation to protect margins, but no specific guidance on timing.

Q: About retail technology improvements and early signs of improvement, A: Explained use of Power BI platform for performance assessment, remerchandising strategies, and efforts to offset traffic declines through target training programs.

Q: On the potential of the Trade and Contract division, A: Discussed leveraging design professionals' spending power, bespoke solutions, and the higher potential of business-to-business relationships compared to B2C.

Q: On e-commerce partnership, A: Mentioned ongoing discussions with a major e-commerce company, expecting to conclude positively by September after meetings and technical discussions.