Natuzzi 1Q sales slide 13.1%
By Furniture Today Staff -- Furniture Today, June 20, 2005
Santeramo In Colle, Italy — Italian leather giant Natuzzi said first-quarter sales were off 13.1% to 166.6 million euros or $218.4 million, compared with 191.8 million euros or $240 million in the same period a year ago.
Earlier, the company had forecast the sales drop and said it would lay off up to 1,320 workers at two factories in Italy. Natuzzi has about 5,500 workers worldwide.
In the latest quarter, Natuzzi posted a net loss of 3.5 million euros or $4.6 million, compared with net income of 9.4 million euros or $11.8 million in the year-earlier period.
Natuzzi Chairman and CEO Pasquale Natuzzi said the business environment "is still characterized by the same mix of unfavorable factors that have negatively impacted our sales and order flow over the past months: furniture demand softening in all major markets and aggressive price competition deriving from low-cost countries located in Eastern Europe and from China, which is even more competitive compared to Italian production thanks to the fixed currency rate with the U.S. dollar."
Upholstery sales in the latest quarter were 146.4 million euros or $192 million, off 13.6% from the comparable 2004 quarter. Other sales, primarily living room accessories and raw materials produced by Natuzzi and sold to third parties, decreased 9.4% to 20.2 million euros or $26.5 million.
Total sales to dedicated stores — Divani & Divani by Natuzzi, Natuzzi and Kingdom of Leather — increased 7.9% to 30 million euros or $39.3 million, compared to last year's first quarter. During the quarter, four stores were opened, one in Italy, one in France and two in Spain, bringing the total to 271, of which 139 are in Italy and 132 in the rest of the world. As of March 31, 2004, there were 253 stores worldwide.
The company said leather upholstery sales decreased 12.8% to 120.4 million euros or $157.9 million, and fabric upholstery sales dropped 17.5% over last year's quarter to 26.0 million euros or $34.1 million.
First-quarter net sales of Natuzzi-branded upholstery were 105.6 million euros, or $138.5 million, representing a 17.9% decrease from 128.6 million euros in last year's first quarter. Net sales of lower-priced Italsofa upholstery were substantially flat at 40.8 million euros or $53.5 million.
In the latest quarter, upholstery sales to the Americas dropped 24.7% on a quarter-over-quarter basis to 59.9 million euros or $78.5 million. In Europe, upholstery sales slid 4.5% to 76.7 million euros or $100.6 million from 80.3 million euros or $100.5 million in the year-earlier period. Sales in the rest of the world increased 1% to 9.8 million euros or $12.8 million.
Seats sold were off 13.1% from last year, with the largest drop in the Americas, where seats sold fell 22.6%. Seat unit sales declined 0.7% in Europe and 4.4% in the rest of the world.
| Natuzzi (a) | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 3/31 | 2005 | 2004 | Change |
| (a) In euros, except for earnings per share, which are in U.S. dollars. (b) Converted at the rate of 1 euro = U.S.$1.3112 for the 2005 quarter and 1 euro = U.S. $1.2513 for the 2004 quarter. | |||
| Sales | 166,600,000 | 191,800,000 | (13.1%) |
| Operating income | (1,100,000) | 13,800,000 | — |
| Net income | (3,500,000) | 9,400,000 | — |
| Earnings per share (b) | ($0.08) | $0.21 | — |
