Italy’s largest manufacturer of leather-upholstered furniture has announced the company’s results for the third quarter of the fiscal year, reporting a drop in general sales, but a slight increase in leather-upholstered sales.

Net sales for the period decreased by 4.8% compared with last year, slipping to €165.5 million ($202.3 million) from €173.9 million for the third quarter in 2003. For the first nine months the company’s sales were flat at €559.9 million which is comparable with last year’s figures.

Net sales of upholstery in the Americas dropped significantly to €69.2 million – a drop of 15.5%. This has been attributed to weak demand due to the depreciation of the dollar against the euro. However, more positive news came from Europe where sales increased by 22.8% to reach €66.9 million. In the rest of the world net upholstery sales decreased 2.75 to €11.0 million on a year-on-year basis.

In terms of leather upholstery, the company’s performance was more positive. Total net sales at retailers Divani and Divani by Natuzzi, Natuzzi Store, and Kingdom of Leather increased by 25.2% to reach €26.8 million. During the quarter three new stores were also opened in France, Switzerland, and Spain. However, sales of Natuzzi branded furniture – which accounted for 76.8% of total Q3 sales – slipped by 0.3% to €112.9 million.

Gross profit for the period was reported as €57.6 million down 5.1% over the same period last year, whilst the gross profit margin increased from 34.8% to 34.9%. Pasquale Natuzzi stated: “ In the third quarter 2004, the company’s profitability continued to be affected by the same factors reported in the previous two quarters: strong appreciation of the euro, higher selling costs related to the opening of stores and galleries and investments in the Natuzzi brand strategy. The economic environment is characterised by the persisting uncertainties due to the weak demand and to the continuing appreciation of the euro. For the whole of 2004 we expect a growth of seat sales of about 3% on 2003, and confirm our forecast of a net earnings of about 5%.”

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