Sunday, 2023 September 24

Days after bumper market debut, lifestyle retailer Nykaa posts fall in net profit for Q3 2021

In its first earnings report after making a blockbuster market debut last week, Nykaa posted a decline in net profits for the third quarter of 2021.

In a regulatory filing on Monday, the USD 14 billion-plus company said that while its gross profit—at INR 3.7 billion—rose 59% year-on-year (YoY) and 14% quarter-on-quarter (QoQ), its net profit dropped 95% to INR 12 million in Q3 of 2021 from INR 270 million in the corresponding quarter last year.

Nykaa’s revenue from operations in the quarter ended September 2021 stood at INR 8.85 billion, growing 47% compared to the same period the previous year and 8% over the last quarter.

The company said its consolidated gross merchandise value (GMV)—across its beauty and personal care (BPC) and fashion verticals—increased by 63% YoY and 10% sequentially to reach INR 16.2 billion. BPC GMV rose by 38% YoY to INR 11.8 billion, while fashion GMV  ballooned 215% YoY to reach INR 4.37 billion. GMV implies the monetary value of orders.

For its BPC platform, Nykaa’s average monthly unique visitors increased to 21 million in the reporting quarter, up 62% over last year, while the number of unique annual transacting customers reached 7.2 million with YoY growth of 40%. Whereas for the fashion vertical, average monthly unique visitors grew to 16 million with YoY growth of 328%, and annual unique transacting customers crossed 1.3 million, up 417% over last year.

On the expenditure side, marketing and advertisement expense as a percentage of revenue from operations stood at 13.7%, up from 11.1% in the last quarter, owing to mass media marketing campaign aimed at building brand awareness and higher customer acquisition costs to acquire new customers.

The company also bought a 51% stake in Dot & Key Wellness Private Limited in its first direct-to-consumer beauty brand acquisition. This will allow Nykaa to expand its skincare, personal care, and nutraceuticals-owned portfolio. As such, BPC contributes the lion’s share of the company’s GMV and revenues. Moreover, in Q3 of 2021, Nykaa opened eight new physical retail stores as well as launched SuperStore by Nykaa—an online B2B platform to sell beauty products to retailers across India.

Nykaa was listed on Indian stock exchanges on November 10 at about  80% premium to its issue price of INR 1,125. Its shares were down by 3% to INR 2287.85  by 2 p.m. on Monday.

Moulishree Srivastava
Moulishree Srivastava
In-depth, analytical and explainer stories and interviews on technology, internet economy, investments, climate tech and sustainability. Coverage of business strategies, trends in startup and VC ecosystems and cross-border stories capturing the influence of SEA, China and Japan on the local startup industry.

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