2023-03-16 05:13:38 ET
Summary
- Natuzzi is an Italian-based designer and manufacturer of furniture with global production, 650 directly operated or franchised stores, another 350 in China, and many more under private labels.
- The company turned its strategy towards mono-brand stores in 2016, which has increased gross profit margins despite decreasing sales volumes and relatively constant SG&A expenses.
- The effect of higher gross margins and constant SG&A is improved profitability. I believe in the company's new strategy.
- However, the company is still fragile because its margins are razor thin and can barely cover interest expenses from operating profits. A strengthening dollar has further aided it, a trend that reversed.
- Like any retailer, the risk of a recession is magnified by operational leverage. I believe NTZ is especially exposed, given that its business model is not strong yet.
For further details see:
Natuzzi S.p.A.: Improving But Still Fragile In A Recession