Italian furniture manufacturer Natuzzi has announced its first quarter results for the 2023 financial year, with invoiced sales falling by 27.4% to €86.1 million, reports ILM.

The branded business, which includes Natuzzi Italia and Natuzzi Editions, brought in €77.5 million in invoices sales, falling by 21.64% year-on-year and representing 92.3% of total sales of upholstered and other home furnishings products compared to 86.8% in Q1 2022 and 76.7% in Q1 2019.

Natuzzi Italia had invoiced sales of €31.6 million, down by 27.4%, which the company attributed to an impact of overstocking in China. Sales were down by 10.0% on the first quarter of pre-pandemic 2019.

Meanwhile, Natuzzi Editions totalled €45.9 million in invoiced sales, down by 17.2%, attributed to de-stocking. Sales were up by 8.3% over the first quarter of 2019.

Sales fell by 33.4% in North America in the quarter to total €23.3 million, while Greater China saw a decline of 69.9% to €4.4 million. Invoiced sales in West & South Europe dropped by 12.1% to €32.4 million and were down by 24.7% in the Rest of World region to €10.7 million. The only region with growth was Emerging Markets, which was up by 0.5% to €13.2 million.

Invoiced sales from direct retail, DOS and concessions amounted to €18 million in the quarter, down by 3.2% year-on-year and up by 1.12% on pre-pandemic Q1 2019. Meanwhile, invoiced sales from franchise stores were €33.8 million, down by 22.8% year-on-year and up by 40.3% from 2019.

The gross margin for the quarter was 35.7%, compared to 34.3% in Q1 2022 and 30.1% in Q1 2019. The net financial result for the period was a loss of €3.4 million, compared to a loss of €0.7 million in Q1 2022.

Group Chairman Pasquale Natuzzi said: “Our sales results are not at the level we aspire to as we continue to face challenging market conditions and a more prudent approach by our customers, resulting in a weaker store traffic and reduced orders from large distributors.

“Globally, our industry is transitioning from the expansionary phase, started in 2021, which created growth for the sector but also led to unprecedented over-stocking at the different level of the distribution value chain.

“The perduring of this economic scenario confirms the importance of the work that our team is doing to ensure a tight control on discretionary costs together with a more effective capital allocation. We are confirming those investments which are pivotal for the execution of our mid-term plan, chiefly to support retail new openings and our factory modernisation.”