Natuzzi (NYSE:NTZ) said its fourth-quarter and full-year 2025 results were pressured by a “persistent and unfavorable macroeconomic environment,” as management outlined a restructuring plan aimed at improving the company’s economic, capital and financial footing over the medium term.
Executive Chairman and Chief Executive Officer Pasquale Natuzzi said the market conditions facing the furniture maker require “responsible, timely, and structuring” decisions. A central part of the plan is to move low-margin Italian production capacity to other manufacturing facilities within the group, including Romania, China, Brazil or Vietnam.
Margin Pressure Hits Fourth-Quarter Results
Chief Financial Officer Carlo Silvestri said Natuzzi’s fourth-quarter gross margin declined to 30.2% from 38.1% in the prior-year period. He said one major factor was the company’s earlier decision to shift some Natuzzi Editions production for the U.S. market from China to Italy to avoid U.S. tariffs on goods manufactured in Asia.
According to Silvestri, later U.S. tariff measures affecting European Union production “offset the benefits” of that move. He also said government grants the company had expected “did not materialize,” leaving Natuzzi penalized by the shift.
The company also booked a €2.3 million impairment of machinery and equipment at certain Italian factories during the quarter. Silvestri said the impairment reflected a prudent view of the current business environment and the reduced recoverability of some non-financial assets. Excluding that impairment, Natuzzi’s gross margin would have been 33.2%, still below the 38.1% reported a year earlier.
Silvestri also cited a less favorable sales mix, with fewer Natuzzi Italia products and more Natuzzi Editions products sold during the quarter, along with lower direct retail sales from the retail channel compared with last year.
Company Pursues Cost Cuts and Pricing Actions
Management said the restructuring plan is intended to improve sustainability over the medium and long term. Silvestri said Natuzzi is continuing to review its price lists to address the effects of U.S. trade duties and the strengthening of the euro.
The company is also working to reduce industrial labor costs. Silvestri said fourth-quarter labor costs totaled €17.1 million, including a €700,000 accrual tied to cost reduction efforts.
Natuzzi remains committed to reducing costs across its Italian structure and in selected commercial subsidiaries, Silvestri said, adding that this effort will remain a focus in 2026.
Retail Impairments Recorded, but Strategy Remains in Place
Silvestri said Natuzzi continues to believe its retail strategy will remain “the core” of the business. However, the company booked a €4.4 million impairment loss on financial assets tied to retail operations, mainly in Europe and the U.S.
Natuzzi also recorded a €1.9 million accrual in administrative expenses for impairment of non-financial assets, compared with €500,000 in the prior-year period.
Inventory Reduction Supports Working Capital
From a cash flow perspective, Silvestri said operating activities used €4.5 million during the period. He highlighted a €2.5 million benefit from changes in working capital, driven primarily by a €13 million decrease in inventory levels.
The company is focused on optimizing inventory and reducing stock levels, Silvestri said, while also noting that trade payables and other liabilities decreased.
In investing activities, Natuzzi collected €9.9 million from the sale of two non-strategic assets: land in Romania for €2.4 million and the completion of the sale of High Point for €7.5 million. Silvestri said the rationalization of the company’s industrial process could make additional assets available for sale to support the restructuring process.
Natuzzi Plans Italian Out-of-Court Restructuring Procedure
Silvestri said Natuzzi’s board has authorized Pasquale Natuzzi to initiate a procedure under Italian corporate law known as Composizione Negoziata della Crisi, or CNC. He said the company expects to make its official submission in the coming weeks.
Silvestri described the CNC as a voluntary, out-of-court restructuring process for Italian companies designed to support early and orderly management of a company’s position while preserving business continuity, industrial value and stakeholder interests.
He emphasized that Natuzzi expects to continue normal daily operations under the current management team. Shareholders will continue to exercise their ordinary rights, and an independent expert appointed by the relevant chamber of commerce will be involved in the process.
The objective, Silvestri said, is to reach mutually agreed solutions with stakeholders while protecting Natuzzi’s industrial and commercial value, strengthening its financial structure, improving operational efficiency and generating cash.
There were no analyst questions during the call. In closing remarks, Pasquale Natuzzi said management remains focused on addressing the situation and preserving the company’s future.
“This company has 67 years history,” he said. “We are planning to write down the next 67 years history.”
About Natuzzi (NYSE:NTZ)
Natuzzi S.p.A. is a global design and manufacturing company specializing in high-quality upholstered furniture. The company’s product portfolio includes leather and fabric sofas, armchairs, recliners, sectional systems and complementary home furnishings such as coffee tables, beds and accessories. Natuzzi markets its offerings under two primary brands—Natuzzi Italia, which focuses on contemporary Italian design, and Natuzzi Editions, which provides a broader range of styles at accessible price points.
Founded in 1959 by Pasquale Natuzzi in Santeramo in Colle, Italy, the company began as a small artisan workshop and has grown into the world’s largest producer of leather upholstered furniture.
