Furniture manufacturer Natuzzi third quarter 2005 net sales decreased by 11.1% to €147.2million, as compared to third quarter 2004. During the same period total seats sold decreased by 8.9%. For the first nine months of 2005, net sales were at €479.4 million, down 14.4% from €559.9 million reported for the same period last year, and total seats sold decreased by 12.6% over the same comparable period.

During the third quarter 2005 net upholstery sales were at €130.5 million, down by 11.3% over the same period last year.

The most significant slump in sales occurred in the Americas (down by 14.2% from €69.2 million) followed by Europe where sales were down by 8.5% on the same quarter last year.

In the quarter ended September 30, 2005, seven new stores were opened (two in France and one each in Italy, Arab Emirates, Australia, China and Singapore), bringing the total number of stores to 284. Leather-upholstered furniture sales decreased by 8.5% over last year’s third quarter to € 110.5 million, and fabric-upholstered furniture was hit harder, falling 24.2 % to €20 million.

Pasquale Natuzzi, chairman and chief executive officer, said: ‘the general economic environment in which the company have been dealing for the first nine months of 2005 was still difficult because of unfavourable currency conditions, rising energy costs and price deflation in the whole furnishing industry thus negatively affecting our overall performance both in terms of sales and seats sold.’

Natuzzi concluded: ‘The order flow confirms the encouraging uptrend

of our promotional line, Italsofa. In addition, we do not underestimate the threat of further increases in the cost of fuel and interest rates,

and the consequence of such events on consumer confidence.

For 2005 overall, the company expected to report a slight decrease in

In light of the above, we expect to report for 2005 a decrease of

between 10-15% of units sold and a net loss of between 1-3% on net sales, while in 2006 net profit margin should be at most at 3% together with an increase in units sold of about 5%."