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Mumbai: FSN E-Commerce Ventures Ltd, which owns online beauty and cosmetics retailer Nykaa, has reported a sharp 58% decline in its consolidated net profit for the December quarter.
Nykaa reported a consolidated net profit of ₹29 crore for the quarter ended December against ₹69 crore a year ago, as the company’s operating expenses almost doubled to ₹439.8 crore.
The company reported a sharp rise of 155% and 56%, respectively, in its advertising and marketing expenses and employee benefit expenses on year, which led to the company’s operating expenses rising 91%.
Sequentially, the company’s operating expenses more than doubled. The company, thus, reported a sharp decline of almost 700 basis points in its EBITDA (earnings before interest, tax, depreciation and amortization) margin.
“Marketing continues to be an area of investment for Nykaa, to reacquire as well as recruit new consumers as a means to ensure stronger organic growth," Falguni Nayar, Executive Chairperson, Managing Director, and Chief Executive Officer, Nykaa, said in a statement.
Gross merchandise value (GMV) of beauty and personal care grew 29% quarter-on-quarter (QoQ) and 32% year-on-year (YoY), while fashion GMV grew 17% and 137%, respectively. Consolidated GMV grew 26% sequentially and 49% on year.
Fashion, while still an early-stage business in the Nykaa ecosystem, now contributes to 26% of the consolidated GMV year to date, the TPG Growth-backed Indian fashion e-commerce platform said.
Led by Falguni Nayar, Nykaa reported a rise in revenue from operations by 36% at ₹1,098 crore as against ₹808 crore in the year ago quarter.
“Growth in Beauty business accelerated in a relatively normalized Covid environment, with a strong revival in the cosmetics category. Our physical store network also experienced one of its strongest quarters ever and we continued opening new stores in line with our larger omnichannel vision," said Nayar.
Ahead of its public listing last year, Nykaa reported a 96% fall in its September quarter consolidated net profit.
Sequentially, both profit and revenue numbers saw an improvement on the back of a higher gross profit margin.
Profit rose 24% compared to the September 2021 quarter and revenue increased by 24%.
Besides TPG Growth, Nykaa’s other investors include Lighthouse India, Steadview Capital and Kravis Investment Partners.
The company got listed in November last year and saw its stock surging nearly 80% on the listing day. The stock had then witnessed a rise of as much as 129% to touch an all-time intraday high of ₹2,573.70, before it pared gains and fell nearly 40%. This was in line with the trend that other new-age listed companies such as One97 Communications parent of Paytm, Zomato and PB Fintech, which owns Policy Bazar, witnessed on listing.
At 9:40 am, the stock was trading at ₹1,774.20, down more than 4% from its previous close.
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