Natuzzi SpA Q3 FY2025 earnings call

• Geopolitical situation and weak consumer confidence have impacted foot traffic in stores in the US and Europe, though conversion rates have shown some improvement but not enough to offset traffic decline.
• Gross margin improved this quarter due to a more favorable sales mix, with Natuzzi Italia sales up 18% and unbranded products down 20%.
• Closing the Shanghai factory last year helped with cost savings in China, but margin improvements are limited by labor costs in Italy post-reshoring of Natuzzi Edition production.
• SG&A costs remain high relative to revenue, with efforts to support sales and reduce fixed costs at the group level. Meeting with the Italian government regarding strategic relevance, and planning to seek measures to improve efficiency at Italian factories.
• Investing in international trade events, in-store visual merchandising, and design; recent trips to India and completed a commercial road show in China to develop projects similar to the Natuzzi Harmony residence in Dubai and Jerusalem.

Product segments: Natuzzi Italia sales grew by 18% in the third quarter of 2025, contributing positively with higher margins. Unbranded products, which are not core to the business, decreased by 20% in revenue.

• Continue supporting branded sales to maintain higher margins.
• Aim for profitability around EUR 28-29 million per month through cost reduction, price list review, and retail network rationalization.
• Hopeful for better sales in 2026 compared to 2025 if consumer confidence improves.
• Contract trade division seen as a potential growth area with a target of EUR 5-10 million in 2026, but initially considered a secondary growth driver.

• Geopolitical uncertainties continuing to affect consumer confidence and business operations.
• Labor cost challenges in Italy limiting margin improvements.
• Dependence on consumer confidence for sales recovery and overall business performance.

Q: Regarding the meeting next Monday in Rome with the government, what to expect and cost structure going forward?

A: Working on a restructuring plan to rationalize Italian factories, needing government and union agreement to move workers; target is to be profitable around EUR 28-29 million per month through various cost reduction measures.

Q: Update on the commercial division and opportunity for 2026?

A: Investing heavily in contract trade business; launched Natuzzi Harmony residence, signed contracts in Dubai and Jerusalem, with target for 2026 between EUR 5-10 million but considered a secondary growth area initially.

Q: Update on CEO selection?

A: Using weekend time to interview candidates, hoping to announce a decision in a short period of time