SANTERAMO IN COLLE, Bari, Italy – Luxury furniture manufacturer Natuzzi said revenues fell four percent during the first quarter, but the results were worsened by an adverse legal settlement.
The company, which is opening U.S. stores and had traded on the New York Stock Exchange, had to set aside €9.3 million (about $10.4 million) after losing in Italy’s Supreme Court in a case brought by laid off workers. Workers are protected during layoffs under government regulations.
An operating loss of €10.2 million resulted compared to an operating income of €1.1 million in the prior year.
“We are considering carefully the implications of the decision by the Italian Supreme Court on our business organization, and industrial footprint worldwide,” said Natuzzi in its SEC filing, suggesting it may shift its manufacturing footprint. Natuzzi exports to more than 120 companies, and says its production is horizontally integrated through company-owned factories in Italy, China, Brazil and Romania. It controls over 92 percent of raw materials and semi-finished products.
Net sales were €115.9 million for the quarter ended March 31, 2017, down 4 percent from the year prior.
“The first quarter of 2017 was disappointing, but not discouraging,” Chairman and CEO Pasquale Natuzzi said. “Our industry, like most retail, faced very difficult challenges caused by the global political environment which in turn caused consumers to hold back their spending.”
Within the core business, furnishings sales grew at a double-digit rate – up 37.5 percent over the same quarter last year) – reaching €8. million and representing 22.1 percent of the Natuzzi Italia branded sales. “This confirms our confidence in our product extension strategy,” says Natuzzi.
The company says it decided not to reduce prices in order to drive revenues, and overall price per seat increased by 5.4 percent despite what it calls “an unfavorable retail environment.”
The company is opening its own stores in the UK, Spain, Switzerland, China and U.S., where it is based in High Point, and opened a store in Paramus, New Jersey last year. In addition, three new Natuzzi Italia stores were acquired in Mexico from its long-standing local partner for the distribution of Natuzzi products. These stores are located in Mexico City, Guadalajara and Monterrey. It operates 69 company-owned stores worldwide. Sales rose 6.6 percent in the Americas last year.