Nykaa shares fall after reporting 96 percent decline in net profits for Q2

Shares of beauty and cosmetics retailer Nykaa fell 108.85 basis points to Rs 2,250.05 apiece during opening of trade on the stock markets on Monday on the BSE. The share had closed at Rs 2,358.90 during the previous day’s trade.

This comes a day after the company announced that its net profit had fallen by 95.5 percent to Rs 1.2 crore for the quarter ending September 30, 2021 on a year-on-year basis.  The company was listed on the public markets on November 10 via Rs 5,300 crore IPO which was subscribed 82.4 times. 

In its second-quarter results for FY 2021-22, the company reported that its revenue from operations grew 47 percent on a year-on-year basis to Rs 885.3 crore with a flat EBITDA margin of 3.3 percent. The company’s marketing and advertising expenses grew marginally for the quarter at 13.7 percent of revenue from operations. The number for the corresponding quarter year before was 11.1 percent of revenue from operations. 

“We have maintained growth momentum in our beauty business, accelerated our fashion business and focused on building the brand Nykaa with strong marketing campaigns both digitally and mass media. Increased marketing spends has led to acceleration of customer acquisition, also evident in the unique visitor and transacting customer metrics,” said Falguni Nayar, MD and CEO of Nykaa, in a statement. 

Orders from the company’s beauty and personal care vertical grew 55 percent year-on-year with a 11 percent decline in average order value at Rs 1,913 per order. The orders for fashion saw a 114 percent growth year-on-year and a 48 percent increase in average order value at Rs 3.257 for the quarter ending September 30, 2021. 

She further added, “The company continues to invest in the expansion of retail stores and fulfillment capacity ahead of the festive season.”

The company also announced the acquisition of 51 percent stake in the direct-to-consumer beauty brand, Dot & Key Wellness in September. The brand will expand its personal care, skincare, and recently launched nutraceutical business under the label IKWI. 

It has also launched its business-to-business platform SuperStore to cater to retailers across India. It added another private label for fashion under the brand name, Gajra Gang.

The company said that it added eight new physical stores across Gwalior, Kochi, Mysore and Ranchi  and has also added 0.37 lakh square feet to its warehouse space.