Nykaa to slow down hiring, records marginal growth in PAT

FSN E-Commerce Ventures Private Limited, the parent company of beauty retailer Nykaa, reported a consolidated net profit of Rs 5.2 crore for the second quarter of FY23, ending September 30 — a marginal increase over the previous quarter, where the number stood at Rs 5 crore.

Moreover, this is a 333% increase compared to the corresponding quarter in the year-ago period.

During the earnings call on Tuesday, Falguni Nayar, Executive Chairperson, MD, and CEO, Nykaa, confirmed that the company continues to face inflationary pressure.

She added, “We have seen fulfilment costs go up. Nykaa decided to get closer to its customers, and instead of four big warehouses, we have fulfilment centres in 15 cities now to reduce the distance.”

The CEO also said that Nykaa was looking at structural changes to reduce the inflationary pressure, including a slowdown in hiring, to counter rising employee costs. It has also seen supply-side inflation creeping up on brand partners. 

The company continues to face inflationary pressure on customer acquisition and has exhausted Rs 233 crore from the Rs 234 crore earmarked from the IPO-proceeds towards customer acquisition and retention.

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Beauty giant Nykaa's shares dip below IPO listing price

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According to the exchange filings, the Gross Merchandise Value (GMV or the measure of the total value of goods sold by an ecommerce platform) grew 45% year-on-year in the second quarter of FY23 to Rs 2,345.7 crore. The platform also recorded a 39% year-on-year increase in revenue from operations to Rs 1,230.8 crore. 

Beauty and personal care made up for Rs 1,603 crore of the quarter’s GMV contribution, while fashion contributed Rs 599.1 crore. 

Last week, the beauty retailer has seen its share price fall below its IPO listing price ahead of the end of the investor lock-in period on November 10. On Tuesday, Nykaa’s shares were trading at Rs 1,186.00 apiece—a sharp recovery from the previous day’s trade, where it closed at Rs 1,157.55. 

“Most of our pre-IPO investors are High Networth Individuals who tend to be long-term investors not driven by exit over a certain period of time. But we can not talk on their behalf, and they may choose to remain long-term or choose to sell for their own needs,” said Falguni, addressing questions on the company’s performance after the one-year lock-in period expired. 

The company also expects the upcoming sale event on the platform to deliver GMV growth, said Anchit Nayar, CEO of the beauty ecommerce vertical at Nykaa. “We cannot comment on the numbers, but we expect a strong festive season with support from our brand partners. We are optimistic,” he added.