Natuzzi Announces Consolidated Results for the First Quarter 2021

The Board of Directors of Natuzzi S.p.A. (NYSE: NTZ) (“Natuzzi” or the “Company” and, together with its subsidiaries, the “Natuzzi Group” or the “Group”) approved today its 2021 first quarter consolidated financial results.

Pasquale Natuzzi commented: “We are pleased to see that the continued effort to navigate through these challenging times has started to translate into positive results.

First quarter revenues improved sequentially. We are also encouraged by the double digit increase of our first 18 weeks written orders vs the same period of 2020 and single digit improvement vs 2019. The demand-driven momentum, that has started in the second part of last year, continues, with our branded business growing at double digit and all main geographies, mainly USA and China, reporting written sales above pre-pandemic level. Europe, which was still affected by heavy lockdowns in Q1, is now catching up rapidly as restrictions are lifted and stores reopen. Encouragingly, April global order flow accelerated by 16% versus our Q1 pace.

As we continue to execute on our strategic initiatives, we achieved significant gross margin expansion; first quarter margins increased more proportionally than sales, thanks to our effort to streamline SG&A costs and improve production efficiency.

We have also carefully increased the retail price of our collections, confirming the strengths of our brands and direct distribution network. These actions allowed us to more than compensate for the increase in raw material and freight costs, which is impacting the economy globally, a trend that we continue to carefully monitor.

We also showed a significant improvement in the cash position, as a result of top line growth combined with a tight discipline on costs, and renewed attention to productivity.

To accelerate the positive momentum and to strengthen our global competitive position, Natuzzi’s Board of Directors appointed a new CEO. I am delighted to welcome Antonio Achille, who I am sure will further boost the work done by management in recent years and evolve Natuzzi into a successful brand and a global leader in the luxury furniture market. As Executive Chairman, I will focus on long-term strategies and continue to be strongly committed to the success of the Company that, I am sure, will express its full potential under the new leadership.”

First Quarter 2021

Consolidated net sales (including non-core sales of €3.4 million) for the first quarter of 2021 were €101.5 million, up 23.1% from €82.5 million reported in 2020 first quarter. Under constant exchange rates, Q1 2021 consolidated net sales would have been up 31.3%, mainly due to the Euro appreciation vs USD.

A. Branded/Unbranded business

Natuzzi Group operates in the branded (with Natuzzi Italia, Natuzzi Editions and Divani&Divani by Natuzzi brands) and unbranded business, offering collections dedicated to large merchants.

Over the last 15 years, Natuzzi has heavily invested in strengthening its brands and extending the retail network to accelerate the branded part of the business, with higher margins and stronger growth opportunities.

Q1 2021 results confirm the continued improvement of the branded business.

A1) Natuzzi Group’s strategy aims at capitalizing on the strengths of its brands, which represent the finest spirit of Italian design and the unique craftmanship details of “Made in Italy”, and continue to deliver positive results. Natuzzi’s branded invoiced sales were €86.0 million, up 31.9% vs the first quarter of 2020, and up 10.9% vs Q1 2019. Our branded business continues the quarter-on-quarter improvement in terms of turnover, representing 87.6% of the Group’s core business in Q1 2021 vs 83.1% of Q1 2020 and 76.6% in Q1 2019.

Written orders for the first 18 weeks of 2021 confirm the positive momentum. Written orders for our branded business grew 59.6% vs the same period of 2020, and 15.7% vs 2019.

A2) Private Label invoiced sales were €12.1 million, down 8.6% compared to Q1 2020 (down 48.6% vs Q1 2019) as result of the Group’s strategy to focus on fewer large accounts and serve them with a more efficient go-to-market model.

B. Key Markets

The Group reported strong momentum in invoiced sales in its key geographies vs Q1 2020:

— +24.9% in North America

— +92.0% in Greater China

— +5.9% in West & South Europe (whose main markets were still affected by lockdown measures in Q1 2021)

— +50.6% in the Emerging Markets

— +10.9% in the rest of the world (which includes Central & South America and the rest of Asia-