Natuzzi (NTZ) Q2 2024 earnings summary

Executive summary

• Sales increased slightly year-over-year, with 2Q 2024 invoiced sales at €84.4 million (+1% YoY) and branded sales rising 2.5% to €76.4 million, now 93.2% of total sales.

• The company is transforming from a manufacturer to a brand retailer, with retail channels accounting for 68–70% of sales, up from 45% in 2019.

• U.S. directly operated stores grew 33% year-over-year, with a new store in Denver, totaling 23 U.S. stores.

• China remains a strategic focus, with a new flagship in Hangzhou pacing at double the speed of other stores.

• 47 new stores opened in 2024, mostly franchised, maintaining a stable net store count.

Financial highlights

• Gross margin improved to 38.1% from 36.4% year-over-year, with adjusted gross margin at 39.3% excluding severance costs.

• U.S. store average sales rose from $1.8–$1.9 million in 2019 to around $4 million.

• Adjusted non-GAAP operating profit estimated at $2 million for the quarter; 2Q 2024 operating loss was (€0.4) million, or €0.8 million profit excluding severance.

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

• Net financial position before lease liabilities: (€17.8) million at June 30, 2024.

Outlook and guidance

• Management expects significant upside when market conditions normalize, especially with lower interest rates and a rebound in housing turnover.

• Plans to continue gradual, disciplined expansion in North America, prioritizing organic growth and careful site selection.

• Long-term strategy envisions doubling or tripling U.S. branded business, with potential for 50–60 additional stores over 5–8 years.

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

• Proceeds from the sale of a non-core US property will fund restructuring and US retail expansion.