Natuzzi SpA (NYSE:NTZ) Q3 2018 Earnings Conference Call - Final Transcript

Dec 03, 2018 • 10:00 am ET


Natuzzi SpA (NYSE:NTZ) Q3 2018 Earnings Conference Call - Final Transcript


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Welcome to the Natuzzi Third Quarter and First Nine Months 2018 Financial Results Call. (Operator Instructions)

Joining us on today's call from Italy are Natuzzi's Chief Executive Officer, Mr. Pasquale Natuzzi; the Chief Financial Officer, Mr. Vittorio Notarpietro; Mr. Nazzario Pozzi, Chief Officer of the Natuzzi Division; Mr. Gianni Tucci, Chief Officer of the Softaly Division; and Piero Direnzo, Investor Relations.

As a reminder, today's call is being recorded. I would now like to turn the conference over to Piero. Please go ahead.

Piero Direnzo

Okay. Thank you, May. Good morning to our listeners in the United States and good afternoon to those of you connected from Europe.

Welcome to the Natuzzi's third quarter and first nine months of 2018 financial results. After a brief introduction, we will give room for a Q&A session. Mr. Pasquale Natuzzi, together with the top management team, will be glad to answer your questions.

(Forward-Looking Cautionary Statements)

And now, I would like to turn the call over to the Chief Executive Officer. Please, Mr. Natuzzi.

Pasquale Natuzzi

Good morning to everybody, and thanks for attending today call.

This is not the first time that I tell you about the huge transformation of our Company from a pure value-for-money upholstery manufacturer into a lifestyle consumer brand and retailer oriented company. Globalization and the continuous pressure on margin have forced us to invest in the brand which means investing in the product, marketing and retailer.

Building up a brand and setting up an efficient retailer business model and an international retailer organization has required time and resources. This strategy was the only available option to face the continuously changing global business scenario we have been experiencing for the last 20 years. I'm not yet obviously satisfied with the numbers disclosed so far, but certain numbers started to support our choice. We believe we are moving towards the right direction. Anyhow, dear shareholders, what I want to share with you all today is the reason why I'm an endless optimist.

In fact, two-thirds of our overall revenue are generated by our branded business. During 2018, our retailer network has increased by 19 stores as a result of new openings and closures of unsuitable locations. The deal with our partner in Greater China demonstrate that we have created an asset, the Natuzzi brand, which is bringing its first positive evidences.

In addition to the above, during the first nine months of the year, the Natuzzi Italia DOS division, composed of 38 stores, shows an increase of 26.6% in net sales versus the same period of 2017. If we look at the recently opened stores in United States, Chicago, Costa Mesa, King of Prussia in Philadelphia and West Palm Beach, having the new Natuzzi Italia retailer format, those DOS direct operating stores have delivered the sales as expected and reached breakeven in the third quarter of the year.

These positive results are strictly linked to the new retail store format which we continue to fine-tune since we started in December 2015. That model is