The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: David Kanen - Kanen Wealth Management - Analyst
: Okay. My apologies. Are you able to hear me now?
Question: David Kanen - Kanen Wealth Management - Analyst
: Okay. In the prepared remarks, you highlighted that you moved production for various reasons out of China and over to Italy and then that caused
some disruption in gross margin. Furthermore, you explained that you enacted a price increase of 10%. So last quarter, Q4 gross margin was 38.1%.
So we went backwards about 400 basis points.
With the moves now completed, should we expect a return back to the 38% level, assuming we're doing EUR75 million to EUR80 million a quarter.
Is that a good assumption or it's going to take some time?
Question: David Kanen - Kanen Wealth Management - Analyst
: Okay. So my question is, in Q2 and for the balance of the year, notwithstanding, yes, it looks like there's going to be a 10% tariff for product coming
in from Italy unless Trump makes a special deal with Meloni. They seem to get along pretty well, but we'll assume 10%. So should I continue to
assume that gross margin will remain at the 34% level in Q2 and beyond with the tariff, let's say, landing at 10% or will it improve with the price
increase and some of the moves? That's what -- I don't think --
Question: David Kanen - Kanen Wealth Management - Analyst
: Okay. And then operating expenses for the quarter were down to EUR27.4 million in Q1. So have you done 38% in gross margin, you would have
actually had almost a $3 million operating profit, $2.5 million to $3 million. So that's why I'm focusing on margin. That reduction in operating
expense to EUR27.4 million, is that sustainable?
I know there's some variable costs, specifically transportation, commission, et cetera. But assuming all things equal, let's say, EUR78 million with
the same mix more or less in revenue, can you maintain that EUR27.4 million operating expense level? Or there was something anomalous that
drove it lower?
Question: David Kanen - Kanen Wealth Management - Analyst
: Okay. And then Mr. Pasquale Natuzzi called out some of the changes that you've made in your new, I guess, you would call it, software or technology
platform to track retail locations, and he said something like you're seeing early signs of improvement. Could you just speak to that a little bit, what
these differences are? And when did you see this improvement? And how profound is it?
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JULY 03, 2025 / 2:00PM, NTZ.N - Q1 2025 Natuzzi SpA Earnings Call
Question: David Kanen - Kanen Wealth Management - Analyst
: Yes. Mr. Natuzzi, you had said that you had implemented some changes in terms of, I'm assuming, technology, information flow between headquarters
and your retail locations. And this new platform you said is showing early signs of improvement. I believe you said that both for the commercial
unit -- the new commercial unit as well as your North American retail.
So if you could explain what some of these changes are, before and after. What it was like before, and magnitude of the improvements that you're
seeing and why? Just give us more color or depth on these early signs of improvement.
Question: David Kanen - Kanen Wealth Management - Analyst
: Okay. I'm going to go back into queue in case someone else would like to ask questions. But I have a request, Antonio, if you would be kind enough
to make an introduction to Justin Christensen, the new North American Retail VP. I would appreciate that.
Question: David Kanen - Kanen Wealth Management - Analyst
: Okay. So my last question is on the commercial division. Also you called out that you're seeing early signs in that business. If you could give us an
update. Longer term, what is the potentiality of the size of that business? And any color that you can give us in terms of the early signs that you're
seeing now that are encouraging?
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consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.
JULY 03, 2025 / 2:00PM, NTZ.N - Q1 2025 Natuzzi SpA Earnings Call
Question: David Kanen - Kanen Wealth Management - Analyst
: Yes. Is that now what you call the commercial division, like selling to hospitality --
Question: David Kanen - Kanen Wealth Management - Analyst
: Okay. Thank you for that commentary. Last question. I had made an introduction, Antonio, to probably the largest home furnishings e-commerce
company. And I believe it was something that you were going to get stood up. Could you give us an update on that, when you expect to launch
and give us an update there?
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