Natuzzi (NTZ) Q2 2024 earnings summary

Executive summary

• 2Q 2024 invoiced sales reached €84.4 million, up 1% year-over-year, with branded sales rising 2.5% to €76.4 million, now 93.2% of total sales.

• Sales increased slightly year-over-year in Q2 2024, outperforming many sector peers facing negative comps amid a depressed consumer environment.

• Directly operated stores in the U.S. grew sales by 33% year-over-year, highlighting the strategic focus on U.S. retail expansion.

• Transformation from manufacturer to brand retailer continues, with 70% of sales now through retail channels, up from 45% in 2019.

• Trade and contract business segments are accelerating, with major projects in the Middle East and Central America and a new business unit established for these areas.

Financial highlights

• 2Q 2024 revenue: €84.4 million (+1% YoY); 1H 2024 revenue: €168.9 million (–0.4% YoY).

• Gross margin for Q2 2024 was 38.1%, up from 36.4% a year ago; adjusted gross margin would have been 39.3% excluding severance costs.

• Adjusted non-GAAP operating profit estimated at $2 million for the quarter, reflecting efficiency gains.

• Operating loss was (€0.4) million versus break-even last year; excluding €1.2 million in severance, operating profit would be €0.8 million.

• Cash position at June 30, 2024, was €28.2 million, down from €33.6 million at year-end 2023.

Outlook and guidance

• Management remains cautious but optimistic, expecting a rebound as macroeconomic and real estate conditions improve.

• Proceeds from the $12.1 million High Point property sale will be reinvested in restructuring and selective retail expansion, primarily in North America.

• Long-term strategy includes potential to double or triple U.S. branded business, with gradual store openings as market conditions stabilize.

• Ongoing restructuring and cost reduction expected to further improve margins and operating leverage.

• Retail expansion continues, with 32 new stores opened in 2024 and retail sales now 68% of total sales.