Nykaa Q1 results: Profit up 8%, sales 24%. Here's what Falguni Nayar says

FSN E-Commerce Ventures Ltd (Nykaa) on Friday reported an 8 per cent year-on-year (YoY) rise in net profit at Rs 5.40 crore for the June quarter on 24 per cent YoY rise in revenue at Rs 1,421.80 crore, the company said in a BSE filing. Nykaa said profit figure included share of loss of an associate.

Ebitda for the quarter surged 60 per cent YoY to Rs 73.50 crore, with Ebitda margin coming in at 5.2 per cent, up 116 basis points over 4 per cent in the year-ago quarter.

Depreciation and lease cost increased YoY on account of incremental capex investment in FY23 in retail stores, warehouses and offices. Interest financing increased YoY on account of incremental bank borrowings in line with deployment of working capital. Other income fell due to utilisation of IPO proceeds, Nykaa said.

Gross mechandise value (GMV) grew 24 per cent YoY to Rs 2,667.80 crore for the quarter. Contributing margin improved to 20.7 per cent from 20.2 per cent YoY.

Executive Chairperson, MD, and CEO Falguni Nayar said: “Our beauty vertical continues to shape into an ecosystem of its own – with steady and balanced growth across our online platforms, physical footprint as well as our consumer brands. Fashion’s consumer brands also experienced steady growth with our own labels now spanning across categories – western wear, Indian wear, lingerie, menswear, accessories and much more. Nykaa Fashion’s growth in the quarter was much ahead than the industry growth but below its long-term trajectory."

"The Nykaa ethos to grow businesses and brands with passion, but also with discipline, is again visible in the way Superstore By Nykaa and our beauty brand Dot & Key have seen significant scale quickly – all while improving the underlying unit economics. Dot & Key has crossed an annualised GMV run rate milestone of 300 crores, growing five-fold in two years while achieving profitability, demonstrating the successful model of building value with the Nykaa playbook,” he added.

In terms of segments, the BPC GMV grew at 24 per cent, with ecommerce platform, physical retail, and the consumer brands witnessing healthy growth.

Physical retail space increased by 43 per cent YoY with 152 stores as of June 30, 2023. Nykaa's owned brands GMV also grew close to 40 per cent year on year.

The BPC annual transacting customers for Q1 expanded to 10.3 million customers – a number which was 6.5 million just 2 years ago, a growth of 58 per cent. At the same time, 80 per cent of this quarter’s GMV contribution came from existing customers.

"The continually growing share of existing customers – while expanding the base – signals very healthy and sustainable customer acquisitions and is a reflection of positive shopping and post-order experiences. The physical retail business witnessed close to a 40 per cent growth in annual unique transacting customers over the previous year," Nykaa said.

The overall fashion GMV grew at 12 per cent for Q1 , slower than the long-term trajectory. The growth exceeded the short-term industry trajectory, given the weak fashion industry outlook for this quarter in particular. However, post the quarter, the business has witnessed positive momentum, with July observing a healthy year on year growth supported by the success of the flagship ‘Hot Pink Sale’, Nykaa said.

The annual unique transacting customer grew 160 per cent to 2.6 million in Q1 compared with 1 million customers two years ago. The current average order value for the platform, in excess of INR 4,400 for Q1 FY24, is up from INR 4,000 two years ago, even with rapid customer expansion. Nykaa’s 13 fashion owned brands witnessed GMV growth of 30 per cent, now contributing to 14 per cent of the Fashion GMV.

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