Nykaa Q4 Results: Profit Drops 72% On Higher Expenses, Muted Fashion Business
Revenue rose 34% to Rs 1,301.73 crore, aided by the beauty and personal care segment.
The fourth-quarter profit of FSN E-Commerce Ventures Ltd., the parent of online beauty and fashion retailer Nykaa, fell due to high expenses and as inflation-weary shoppers curbed discretionary spending.
Consolidated net profit dropped 72% year-on-year to Rs 2.41 crore in the quarter ended March, according to an exchange filing. That compares with the Rs 7.61-crore consensus estimate of analysts tracked by Bloomberg.
FSN E-Commerce Ventures Q4 Highlights (Consolidated, YoY)
Revenue rose 34% to Rs 1,301.73 crore, aided by the beauty and personal care segment, as against an estimate of Rs 1,350.99 crore.
Operating profit rose 84% to Rs 70.7 crore, in line with estimates.
The margin came in at 5.4% vs. 4%. Analysts had estimated it at 5.2%.
Total expenses soared 33% to Rs 1,303 crore.
Depreciation increased 74% year-on-year on account of incremental capex in retail stores, warehouses and offices.
Cost of raw materials consumed shot up to Rs 97.2 crore as compared with Rs 25.78 crore a year ago.
Gross merchandise value for beauty and personal care grew 29% to Rs 1,628.9 crore. Own brands contributed 12.4% to the segment's GMV.
For fashion, the gross merchandise value grew 38% to Rs 664.1 crore. The pace of growth has slowed both sequentially and over last year.
Own brands contributed 13.9% to fashion segment's GMV.
Marketing and advertisement expense was at 10.8% of net sales in Q4 as compared with 12.4% a year earlier.
In its quarterly update, Nykaa had said that its beauty and personal care categories saw sustained demand, partly aided by the ‘Pink Love’ sale introduced during the quarter. The category has seen higher growth rate in Q4, even when compared to the sales heavy festive quarter of fiscal 2023.
The operating parameters for the beauty and personal care business—average order value and conversion rates—have been "robust", which has aided revenue growth, it had said. In Q4, the average order value stood at Rs 1,803, up 5% over the previous year, while the conversion rate was 3.8%.
The number of beauty and personal care orders rose 22% to 8.8 million while visitors grew 14% to 231 million, according to the investor's presentation.
As for the fashion business, Nykaa said sales were impacted because of demand slowdown. In Q4, the number of visitors for the fashion segment rose 12% to 127 million. The average order value went up by 6.76% to Rs 2,651 while the conversion rate was just 1% on total orders of 1.2 million.
Nykaa has increased its beauty physical store count to 145 stores, with a total area of 1.4 lakh sq ft across 60 cities, as on March 31, 2023. It also has 40 fulfillment centers spanning 13 lakh square feet, in 15 cities.
The same-store sales growth for the beauty category stood at 36%.
Three multi-brand outlets were launched for Nykaa Fashion in FY23. Nykaa's lingerie store, Nykd, now retails in four exclusive outlets and in about 900 general trade outlets. In terms of other offline expansion, Nykaa now retails Twenty Dresses and RSVP in 112 multi-brand outlets and Gajra Gang and Likha in six multi-brand outlets, as on March 31, 2023.
Shares of the company ended 2.57% lower on Wednesday, as compared with a 0.34% decline in the benchmark Sensex.