Natuzzi S.p.A (NYSE:NTZ) Q3 2019 Earnings Conference Call - Preliminary Transcript
Dec 02, 2019 • 10:00 am ET
aggressive development of the retail business within end of this year we plan to open five Natuzzi (ph) Editions store in United Kingdom.
The Italian Divani&Divani by Natuzzi store network continues to deliver the positive sales performance and be a profitable. In consideration of the (ph) ambitions ship program, we have a for the retailer development recently hired a new corporate retailed manager. Ms. Italia Casalino, who will be responsible and supporting the regional manager for the achievement of their P&L early target and the execution of the retailer business model. The wholesaler branded churn consisting mainly of Natuzzi gallery represents
that 32% of the total business. The same of percentage as the last year. The strength of Natuzzi brand has allowed us to limit the volume and margin erosion in America (inaudible) this distribution churn is now interested to Mr. Cosimo Bardi who is support the regional manager in the development of such a business. Eventually Mr. Bardi and Ms. Casalino they are available for any explanation if needed. The Wholesaler brand -- unbranded -- the Wholesaler unbranded division lead by Gianni Tucci represents 19% of the total business. It was at 24% the one year ago. The performance of this division as reflected the imposition of such US study. Finally solution is a still unpredictable (ph) unlike of you .
So, you know that to overcome the US custom duties we started the revision of the entire Group industrial allocation to recover volume and margin including outsourcing action in both Asia and the Euro. The first step of such revisions started from China. In fact our plant in China as it become less competitive because of the above mentioned study. So it must be downsized, therefore the current 88,000 square meter plant would be replaced in third quarter of 2020 by a smaller plant 38,000 Square meter in order to satisfy the development plans only for China and the Rest of Asia-Pacific market, which -- they are not impacted by (inaudible).
We are now in an advanced stage of negotiations for an outsourcing production in Vietnam that will manufacture unbranded products for these non-American market. Production in Vietnam will start gradually from the first quarter 2020 as per the production of wholesaler branded for North America. Our Brazilian plan which has production capacity we start serving the East Coast within the first half of 2020 that will improve the margin for this standard -- Business standard. At the same time we are progressing in negotiations with an external player
Find additional outsourcing production capacity in Mexico to serve the United States of the West Coast we believe such outsourcing reduction in Mexico could start in the second of 2020. To recap North America market would be served from plants in low cost countries outside the China to avoid the US tariff, the unbranded production (ph) for market would be made in Vietnam the wholesale branded production would be made part in Brazil and part in Mexico.