Mumbai-based FSN E-Commerce Ventures, the parent company of the leading beauty and personal care platform Nykaa, reported a remarkable 50% surge in net profit to Rs 7.8 crore for the second quarter of the fiscal year 2024, up from Rs 5.2 crore in the corresponding quarter of the previous year. This boost in profitability has been significantly driven by the robust performance of its fashion business.
The company’s overall revenue also climbed by a notable 22%, reaching Rs 1,507 crore compared to Rs 1,230.8 crore reported in Q2 of the previous year. The growth comes despite a shift in the festive sales season, which began a few weeks later than the previous year, impacting the Q2 growth trajectory to a certain extent.
Nykaa’s beauty and personal care segment witnessed a surge in demand during its flagship sale event in July, contributing positively to the company’s financial health. The fashion segment, in particular, saw a substantial increase in demand, with CEO Adwaita Nayar attributing the success to strategic initiatives aimed at improving financial health by plugging leakages, reducing return to origin (RTO) rates, and blacklisting non-compliant customers and pin codes. Additionally, the introduction of convenience charges at the cart level played a pivotal role in enhancing the profitability of the fashion business.
The company’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin also saw an improvement, inching up from 5% in Q2FY23 to 5.4% in Q2FY24. Marketing expenses as a percentage of net sales have decreased, further propelling the fashion segment towards EBITDA profitability.
Amidst aggressive discounting by various companies in the beauty and personal care category, Nykaa managed to hold its ground, thanks to the proliferation of numerous homegrown and international brands considering India as a priority market.
Expenses for the quarter stood at Rs 1,502 crore, marking a 22% year-on-year rise. Despite this, the first half of FY24 has positioned Nykaa for a strong year, especially with historically higher consumer demand in the latter half.
The company’s consolidated revenue from the fashion business showed a robust growth of 28% year-on-year, recording ₹130.5 Crore, bolstered by a 32% growth in net sales value and a 30% increase in annual unique transacting customers, reaching 2.8 million as of September 30, 2023.
New ventures like Superstore by Nykaa demonstrated exponential growth, with a net sales value of ₹98.6 crore for the quarter, marking a 105% year-on-year increase. The Superstore business has expanded its reach to nearly 1.3 lakh transacting retailers across 770 cities.
On a standalone basis, however, the total income experienced a dip to ₹64.3 crore from the previous year’s ₹83.47 crore in the September quarter.
Further bolstering its market presence, Nykaa acquired Iluminar Media Private Ltd for ₹29.27 crore during the quarter. Following these announcements, the company’s shares surged by 5% on Monday, reflecting positive investor sentiment.
With a promising first half, Nykaa looks forward to a stronger H2, banking on historical trends of heightened consumer activity, potentially setting the stage for sustained growth in the e-commerce landscape.
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