Italian sofa emporium Natuzzi (NYSE:NTZ) reports Q3 2006 earnings Wednesday afternoon. While you're waiting for the news, sit back, take a load off, and ponder the following.

What analysts say:

  • Buy, sell, or waffle? Wall Street is no help here; no U.S. analysts follow the stock.
  • Revenues. Lacking analysts, we also lack revenue estimates.
  • Earnings. Same story with profits. But according to Capital IQ, one European analyst tracks the company, projecting $1.65 in profits for the year.

What management says:
More changes at the top topped the news for Natuzzi this quarter. As we noted last quarter, June 6, 2006, marked the appointment of a new CEO, Ernest Greco (of Bulgari, Wang Labs, and Hewlett-Packard fame). This quarter, it was the CFO getting the switcheroo, as Filippo Simonetti took over as Natuzzi's top bean counter. Simonetti hails from Indesit and the now-dismantled (and hilariously named) Siemens joint venture "Siemens Nixdorf." Also, general manager Giuseppe Desantis resigned that post effective Nov. 1, although he's staying on as vice chairman of the board for the time being.

What management does:
Natuzzi reported a strong quarter back in September, with sales up 18% year over year and healthy profits providing a pleasant contrast to last year's losses. As a result, rolling gross margins turned upward once more, and the company's rolling operating and net margins became profitable again for the first time in more than a year.

Margins %

3/05

6/05

9/05

12/05

3/06

6/06

Gross

35.2

30.8

32.7

32.4

31.8

33.1

Op.

3.4

(2.3)

(1.0)

(1.2)

(0.7)

2.2

Net

0.8

(2.2)

(3.4)

(1.0)

(0.6)

3.0
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
It's been nearly a year since Natuzzi promised (warned?) investors that it would achieve "at most a 3% margin" this year. Thanks to last quarter's results, it's well on its way to maxing out that promise. But beware -- Greco made a point of, well, pointing out that the firm's sales rise last quarter "was mainly sustained by the existing backlog that has decreased materially over the past few months" [emphasis added]. Greco also cited the usual litany of complaints within the global furniture industry: a "soft business environment," "high energy costs," and "strong price competitive pressure," plus a new complaint (for U.S. investors): "the strength of the euro especially against the U.S. dollar."

Funny. I don't recall any of Natuzzi's competitors (see below) mentioning that the "weakness of the U.S. dollar against the Euro" has been doing wonders for their own bottom lines. Perhaps, like politics, all investor relations are local.

Competitors:

  • Bassett Furniture (NASDAQ:BSET)
  • Ethan Allen (NYSE:ETH)
  • Furniture Brands (NYSE:FBN)
  • Stanley Furniture (NASDAQ:STLY)

What did we expect out of Natuzzi last quarter and what did it produce? Find out in:

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Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.