Home TECH nykaa: Nykaa profit jumps 344% YoY, revenue up 39%

nykaa: Nykaa profit jumps 344% YoY, revenue up 39%

Omnichannel beauty retailer Nykaa’s operating revenue rose 39% to Rs 1,230 crore in the second quarter.

It turned in a profit of Rs 5.5 crore, a 344% increase on year but nearly flat compared to the sequential April-June quarter.

The quarterly profit increase was driven mainly by strong consumer demand in the run up to the festive season, and efficiencies gained in marketing and fulfilment expenses, the company said in a filing to the BSE.

Revenue from operations as well as operating expenses grew by around 7% in the July-September period.

Nykaa’s gross merchandise value (GMV) increased by 45% to Rs 2,345 crore in the three-month period as the number of total orders grew on its platform.

The Mumbai-based firm said it had expanded its offline presence with new stores going up to 121 compared to 112 in the previous quarter.

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Of its total GMV in the quarter, Rs 122.5 crore worth of gross sales came from these stores, according to a presentation by the firm.

“Post Covid-19, our accelerated investments in new store rollouts as well as store upgradation has resulted in improved footfalls and higher same store sales,” said Falguni Nayar, MD and CEO, Nykaa.

Consumer demand for premium beauty, personal care and wellness is showing signs of buoyancy as the company gears up for a promising second half of the ongoing financial year, she added.

“Our business has delivered sustainable, strong growth, while investing in capabilities for the future. Our online and offline presence in beauty has delivered strong growth with improving margins. There has been structural improvement in fulfilment costs as we move to regional warehouses,” Nayar said.

The company said Ebitda (earnings before interest, taxes, depreciation and amortisation) improved to Rs 61 crore from Rs 28.8 crore in the year-ago period, and Ebitda margin improved to 5% from 3.3% in the corresponding period last year.

Nykaa’s fulfilment costs as a percentage of revenue came down by 73 basis points to 9.5% in the quarter under review.

However, the company said the improvement in fulfilment costs driven by regionalisation was partly offset by inflation.

“Our focus on curation and discovery in fashion is evident, as new season merchandise accounted for 24% of Nykaa Fashion GMV; international brands are at 13% of Western wear category GMV in Q2 FY23,” she said. “Repeat buyers in Fashion now contribute 66% of Q2 FY23 GMV, giving us confidence in our product proposition. Digital marketing costs for the fashion business are slightly higher than during the Covid-19 period, resulting in marketing costs sustaining at Q2 FY22 levels.”

Nykaa Fashion is run on a marketplace model, contrary to the core beauty business.

ET has reported that ecommerce shopping growth was relatively muted in the first half of the year due to inflationary pressures. E-tailers have witnessed revival in demand during the festive season sales but
a recent muted outlook by third-party logistics firm Delhivery has again put a question mark on demand for the rest of the financial year.

Shares of Nykaa have fallen recently as part of a broader correction in the markets for new-age company stocks.

Its shares slipped below the Rs 1,000-mark for the first time last week.

They closed 2.44% higher on the BSE Tuesday at Rs 1,185.75 apiece after the company announced its quarterly earnings.

The one-year lock-in period for pre-IPO investors is slated to expire on November 10.

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