Nykaa's net profit dips for Q3, driven by increased marketing spends

Beauty retailer Nykaa, which went public in October 2021, has seen an uptick in fulfilment, marketing, and advertising as well as employee benefit expenses during the quarter
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Beauty and fashion retailer Nykaa reported a net profit of Rs 27.9 crore for the third quarter of Financial Year 2021-22, a decline of 59.5 percent from the corresponding quarter of the previous year. This was driven by a 155 percent increase in marketing and advertisement expenses and a 72 percent jump in fulfilment expenses, year-on-year. 

The company’s employee benefits expense and other expenses respectively rose by 56 percent and 89 percent year-on-year.

The company reported revenue from operations to the tune of Rs  1,098.4 crore for the quarter ending December 31, 2021 — a 36 percent jump from the year-ago quarter.

“We continue to be on a steady growth trajectory across both beauty and fashion businesses, with an overall revenue growth of 65 percent for the nine month period year-on-year. Growth in beauty business accelerated in a relatively normalised COVID-19 environment, with a strong revival in the cosmetics category,” said Falguni Nayar, Executive Chairperson, Managing Director and CEO of FSN E-commerce Ventures, the parent entity of Nykaa, in a statement.

She added, “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. Fashion, while still an early-stage business in the Nykaa ecosystem, now contributes to 26 percent of the consolidated GMV year to date.”

The company reported a 49 percent growth year-on-year in total GMV (Gross Merchandise Value) at Rs 2,043.5 crore for the third quarter of FY 2021-22. Of this, beauty and personal care clocked Rs 1,533.3 crore, a 75 percent contribution. 

The company’s EBITDA shrunk by 36 percent on a year-on-year basis to Rs 69 crore

Falguni Nayar, Founder, Nykaa

The Average Order Value (AOV) for the beauty segment remained stagnant on a year-on-year basis while the AOV for fashion grew by 24 percent on a year-on-year basis. The number of unique annual transacting customers rose to 278 percent for the fashion category on a year-on-year basis, while the growth for the beauty category stood at 44 percent. 

In the statement, Nykaa said that it had added 12 new physical retail stores across the country, taking the total store count to 96 as of December 31, 2021 across 45 cities. The company also expanded its warehouse storage space by 1.35 lakh square feet during Q3. 

During the quarter it had also acquired 51 percent stake in direct-to-consumer brand of Dot & Key Wellnessfor Rs 96.9 crore.

Edited by Kanishk Singh

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