Italian furniture manufacturer Natuzzi has reported a decline in first quarter sales as markets fail to deliver expected improvement.

According to its latest trading update for the first quarter ended 31 March 2025, total sales amounted to €78.1m, down 7.6% from €84.5m in 1Q 2024.  

Gross margin was 34.1%, compared to 36.9% in 1Q 2024, primarily due to the transition phase of the planned production shift of Natuzzi Editions for the North American market from China to Italy.

In 1Q 2025, the company had an operating loss of (€0.8)m, compared to a profit of €0.6m in 1Q 2024.

During 1Q 2025, the group invested €1.9m, primarily to upgrade the Group’s Italian factories.

As for Natuzzi Italia, invoiced sales amounted to €27.7m, compared to €29.3m in 1Q 2024, while Natuzzi Editions invoiced sales (including invoiced sales from “Divani&Divani by Natuzzi”) amounted to €44.3m, compared to €46.7m in 1Q 2024.

Within its markets, the group said that West & South Europe sales fell 13.6% to €24.9m from €28.9m, while North America sales were down 5.4% to €22.9m and sales in China fell 3.3% to €5.5m. Emerging markets revenues decreased 8.5% to €11.4m and Rest of the World sales were down 5.7% to €10.5m.

“The performance in West & South Europe reflects a generalized difficult macroeconomic condition, especially for some European mature markets, as well as the loss of disposable income by consumers as a result of high interest rates and inflation in prior quarters,” Natuzzi said.

During the quarter, the company closed two underperforming Natuzzi Italia stores— one in San Sebastian, Spain, and one in the Greater London area, UK— as part of its ongoing initiative to streamline its retail footprint and focus on higher-potential locations.

Pasquale Natuzzi, Executive Chairman of the Group, commented: “The markets in which we operate have not shown those signs of improvement we expected. The business environment has been further affected by the introduction of U.S. trade duties on April 2nd, the perduring Russia-Ukraine conflict, and, more recently, the escalation of tensions in the Middle East. In this context we have intensified our efforts to support commercial deployment.

“We continue to implement our Brand commercial strategy that integrates collections, 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 roll-out.

“This year marked our return to the Salone del Mobile Fair in Milan, after a five-year absence that coincided with the pandemic and post-pandemic period. At the Milan Fair, we unveiled the new Natuzzi Editions collections: “Feelwell”, “Dolcevita”, and “Neo Heritage”. During the Milan Design Week, we also presented the Natuzzi Italia “Comfortness” and “Circle of Harmony” collections, which reflect our evolution into a global lifestyle brand, true to our heritage.

“Natuzzi Italia collections have been enriched through collaborations with international designers such as Andrea Steidl, Karim Rashid, Marcantonio, and Mauro Lipparini. For both Natuzzi Italia and Natuzzi Editions, the new collections have been supported by tailored, high-quality marketing campaigns.

“We have worked to support and innovate the three channels in which we operate: Retail (DOS and FOS), Galleries, and the newly established Contract channel (B2B opportunities).

“In Retail we’ve made significant investments to improve analytics and intelligence. We have built the infrastructure to monitor store performance in real time, focusing on key indicators such as foot traffic, conversion rates, average ticket and product category performance. This enables a data-driven diagnostic of each store across our network, with the objective of progressively improving the performance of our retail.

“The Re-imagined Galleries format, that was introduced late last year, has become operational in 1Q 2025. While still in its early stages, it has started to show some initial signs of positive impact, both in term of new openings and remerchandising, particularly in the U.S.

“Following the launch of Natuzzi Harmony Residence in Dubai last November, we are seeing early signs of growing interest in our Contract division—an area we consider having significant growth potential and strategic relevance for our Group.

“Our immediate focus is the full and effective deployment of this strategy in our main markets. We have prioritized initiatives aimed at strengthening sales and engagement across all regions, although their full impact will depend on market dynamics and execution over time.

“North America remains a strategic priority. We have implemented a new organization with the appointment of a new VP of Retail, Justin Christensen, and a new VP of HR, Sharri McIntyre, who will focus on improving our retail and commercial operations. Justin has over 25 years of experience in the retail industry particularly in fashion, having worked with European and American fashion groups which include Brioni and Ralph Lauren. Sharri, with over 20 years of experience, has held the position of VP Corporate HR at Louis Vuitton and HR Director at Williams-Sonoma.

“In Europe we have taken direct control of our largest market, the UK, by appointing a new Country Manager, Antoine Nicolay, to lead the commercial development for both the retail and wholesale channel. Antoine brings over 10 years of experience in the luxury and consumer goods sectors.

“In Italy, the recently appointed Country Manager, Rocco Rella, is contributing positively to improving 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 the new Natuzzi Italia collections to our dealers, replicating the ‘Milan Design Week’ format at a local level.

“Our new collections have generated interest among both existing and prospective clients, leading to commitment to opening new galleries in France and Germany.

“We believe that the steps we’ve taken on collections, marketing, and retail management represent a solid foundation for improving our commercial performance over time. Our objective remains to strengthen the brand and enhance operational efficiency with the aim of delivering sustainable value for our stakeholders. However, the actual results will depend on market conditions, consumer sentiment, and the effective execution of our strategy.”