Nykaa Q1 Results: Profit Falls By Nearly Half, Misses Estimates
Nykaa’s quarterly profit fell, missing estimates, on higher expenses.
Net profit attributable to shareholders of FSN E-Commerce Ventures Ltd., the parent of the online beauty and fashion retailer, dropped 47% sequentially to Rs 4.55 crore in the quarter ended June, according to its exchange filing. That compares with the Rs 20.2-crore consensus estimate of analysts tracked by Bloomberg.
The drag on net profit was particularly because of higher tax. Profit before tax rose 45% to Rs 8.43 crore in June-ended quarter, the filing said.
Other Highlights (QoQ)
Revenue rose 18% to Rs 1,148.42 crore—against the forecast of Rs 1,125.4 crore.
Operating profit rose 20% to Rs 46 crore—the estimate was Rs 66 crore.
Operating margin stood at 4%, same as that of March quarter. Analysts had pegged it at 5.9%.
Expenses shot up 17% to Rs 1,148.44 crore.
Overall, the gross merchandise value rose 20% to Rs 2,155.8 crore, surpassing the festive quarter high.
For fashion, the gross merchandise value grew 20.57% to Rs 582 crore. Owned brands contributed Rs 70.6 crore.
Gross merchandise value for beauty and personal care grew 18.2% to Rs 1488.8 crore. Owned brands contributed Rs 166.3 crore.
GMV for other businesses including NykaaMan, the eB2B platform SuperStore by Nykaa, and international grew 50% to Rs 85 crore.
Total BPC orders grew to 8.1 million, highest since Q4 FY21.
Fashion business recorded total orders of 1.1 million in Q1.
Nykaa has seen improved order conversion per visits during April-June over the last quarter. The average order value for beauty and personal care market in first quarter stood at Rs 1,780, higher than previous quarter but lower compared to Q1 FY22.
As for fashion business, the average order value stood at Rs 4,357.
For long term sustainable growth, the company in it investors presentation said the focus will be on customer acquisition and order volume.
The beauty retailer had during the quarter launched Victoria’s Secret and Pat McGrath Labs. It has also partnered with Estee Lauder to bring 'The Ordinary' brand to India to cater to the premium and luxe categories.
Nykaa has opened 8 stores across cities like Pune, Coimbatore, Delhi, Ranchi, Ahmedabad, and Kolkata, taking the total count to 112 stores across 52 cities.
The company has also been strengthening its content-driven model to drive growth. On Friday, Nykaa also announced the acquisition of lluminar Media Private Ltd, known as "Little Black Book".
"LBB's large, discerning user base, content creation capability, curation mindset, and relationship with emerging brands makes it an attractive content powerhouse," the company said in a statement. "Their focus on fashion, home and beauty categories fits well with Nykaa's areas of strength."
Currently, LBB has a user base of 70 million led by urban millennials.
"Our business continues to grow across the verticals, despite an adverse and challenging macroeconomic environment, demonstrating the strength of our business fundamentals and unique customer-first experiences," said Falguni Nayar, executive chairperson, managing director, and chief executive officer.
With the return of offline shopping behaviour and consumer demand showing early signs of recovery, she said, "We are gearing up for a promising festive season this year."
The sequential growth of fashion, Nayar said, has come as a result of new launches including Twig & Twine, Gloot and Azai along with the industry witnessing revival as factors such as mobility and travel improved with the opening of the economy.
"We remain focused on investing in growth engines of the future, particularly Superstore by Nykaa, Nykaa Man, and international operations," Nayar said. "Our efforts are towards building the business model in a sustainable manner."
"We are witnessing promising revenue growth in these ventures, giving us confidence in our ambitions," she said.
Shares of FSN E-Commerce closed 1.69% down before the results were announced on Friday compared with a 0.09% gain in the benchmark Nifty 50.