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Natuzzi "America's" Net Sales Decrease By 19% For Quarter

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NET SALES Natuzzi third quarter 2007 net sales were at EUR 141.3 million, down 10.9 percent from EUR 158.5 million in third quarter 2006. During the first nine months of 2007, total net sales decreased by 15.7 percent at EUR 457.5 million from EUR 542.4 million reported for the same comparable period of 2006. In the third quarter 2007, upholstery net sales were at EUR 125.3 million, decreasing by 11.8 percent with respect to EUR 142.0 million in third quarter 2006. During the same period, the Group sold 594,888 seats, or 13.5 percent less than the same comparable period of 2006. Other sales (principally living room accessories and raw material produced by the Group and sold to third parties) decreased 3.0 percent to EUR 16.0 million over third quarter 2006. During the quarter ended September 30, 2007 net sales in the Americas decreased by 19.0 percent at EUR 48.7 million from EUR 60.1 million in third quarter 2006, by 6.1 percent in Europe at EUR 64.6 million and by 8.4 percent in the rest of the world at EUR 12.0 million. In the third quarter of 2007, 11 new Natuzzi Stores were opened (2 in France, 2 in UK, 2 in the Netherlands, and 1 in Germany, Russia, Romania, Poland and China), whereas 1 store was closed in Hungary, thus bringing the total number of Natuzzi Stores to 290 as of September 30, 2007. As of the same date, there were 486 Natuzzi Galleries worldwide. Quarterly leather-upholstery net sales were at EUR 113.3 million, down 8.2 percent from EUR 123.4 million in third quarter of 2006 and fabric-upholstery net sales were at EUR 12.0 million down by 35.5 percent from EUR 18.6 million reported one year ago. Total sales for Natuzzi branded products decreased by 17.9 percent at EUR 68.8 million, and sales for Italsofa products by 2.9 percent at EUR 56.5 percent, respectively from EUR 83.8 million and EUR 58.2 million reported one year ago. GROSS & OPERATING RESULTS For the quarter ended September 30, 2007, the Group reported a gross profit of EUR 38.6 million, down from EUR 51.1 million of last year comparable period. Gross profit as a percent of sales for the third quarter 2007 decreased at 27.3 percent from 32.2 percent in third quarter 2006. The Group reported for the third quarter of 2007 an operating loss of EUR 11.0 million as compared to an operating loss of EUR 1.1 million reported one year ago. FOREX AND TAXES During the third quarter of 2007 the Group reported a net foreign exchange loss of EUR 5.9 million, as compared to a net foreign exchange loss of EUR 0.4 million in last year third quarter. In the same period, the Group reported a deferred tax asset for EUR 1.9 million. NET RESULT AND GROUP EARNINGS PER COMPANY’S SHARE For the quarter ended on September 30, 2007, the Group reported net losses of EUR 14.1 million (or EUR 0.26 losses per share), versus Group’s net earnings of EUR 0.8 million (or EUR 0.01 earnings per share) reported for third quarter of 2006. Considering the first nine months of 2007, the Group reported net losses of EUR 23.1 million (or EUR 0.42 losses per share), versus net earnings of EUR 17.5 million (or EUR 0.32 earnings per share) reported for the same comparable period of 2006. Pasquale Natuzzi, Chief Executive Officer and Chairman, thus commented “The furnishings sector still continues to suffer from widespread weak business conditions in most of major markets, particularly noteworthy the US, where sluggish economic activity and concerns about credit situation have dampened the demand for discretionary spending. The persisting unfavorable level of Euro exchange rates against major currencies, U.S. dollar first of all, marketing investments not completely absorbed by current production volumes, the strong revaluation of the Brazilian currency against USD which has negatively affected the competitiveness of our manufacturing operations in the South American country, and the upward pressure in the raw material market, have all contributed to the quarterly unsatisfactory results. Although such a challenging business scenario, we registered an encouraging recovery in the order flow in the third quarter, thus reducing the negative gap on a year-to-date basis to a low-digit decrease”. Mr. Natuzzi concluded: “We remain committed to invest in the repositioning of the Natuzzi brand and reorganization of our sales activities and we continue to be focused on the current restructuring process of our operations, so to regain competitiveness and profitability in the medium term”. ABOUT NATUZZI S.P.A. Founded in 1959 by Pasquale Natuzzi, Natuzzi S.p.A. designs and manufactures a broad collection of leather-upholstered residential furniture. Italy’s largest furniture manufacturer, Natuzzi is the global leader in the leather segment, exporting its innovative, high-quality sofas and armchairs to 123 markets on 5 continents. Since 1990, Natuzzi has sold its furnishings in Italy through the popular Divani & Divani by Natuzzi chain of 124 stores, and 1 Natuzzi Store. Outside Italy, the Company sells to various furniture retailers, as well as through 165 licensed Divani & Divani by Natuzzi and Natuzzi Stores. Natuzzi S.p.A. was listed on the New York Stock Exchange on May 13, 1993. The Company is ISO 9001 and 14001 certified.

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