Nykaa's Q2 net profit surges 50% YoY to Rs 7.8 Cr; fashion biz improves

Nykaa's fashion vertical showed improvement in the second quarter with repeat customers and long-term investments driving the change.

Nykaa's Q2 net profit surges 50% YoY to Rs 7.8 Cr; fashion biz improves

Monday November 06, 2023,

3 min Read

Beauty and personal care firm Nykaa posted a 50% rise in net profit to Rs 7.8 crore in the July to September quarter. Revenue from operations surged 22% to Rs 1,507 crore in Q2 FY24 against Rs 1,230 crore earned in the comparable period last year, according to a filing with the exchanges.

However, this was matched by a rise in total expenses to Rs 1,502 crore from Rs 1,228 crore incurred in the same period last year, hurt by a whopping 344% rise in expenditure towards changes in inventories of finished goods and stock-in-trade.

In a press statement, Nykaa said its revenue from operations grew despite the delay in the festive season to October, which typically falls in September every year.

The Falguni Nayar-led company's EBITDA margin expanded to 5.4% in the second quarter of FY24 from 5% in Q2 FY23.

Beauty and personal care

Beauty and personal care (BPC), which represents Nykaa’s largest segment by revenue, reported a 23% YoY growth in gross merchandise value (GMV) to Rs 2,001 crore in the second quarter of FY24 across its ecommerce, physical retail, and consumer brands portfolios.

Close to 13 new offline stores were launched in the quarter, totalling 165 stores as of September 30, 2023. The retail business now constitutes 8% of the overall BPC GMV.

“The festive season is a big driver for consumption in the beauty category and a shift of around 20 days in the festive calendar has resulted in some growth being impacted for the quarter. H1 FY24 BPC performance sets up Nykaa well for the year with the second half historically witnessing superior consumer demand,” the company said in a statement.

However, discounting also increased in the BPC category due to the proliferation of a number of home-grown brands as well as an increasing number of international brands making India a priority market, it added.

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Fashion business improves

Nykaa Fashion—Nykaa’s second-largest segment by revenue—witnessed marginal improvement in the second quarter, with revenue from operations rising 28% to Rs 130.5 crore compared to last year.

Net sales value rose 32% YoY helped by an increase in annual unique transacting customers which grew at 30% YoY to 2.8 million as of September 30, 2023, according to the company. GMV of the vertical stood at Rs 762.8 crore in the quarter, with 46% of its GMV coming from existing customers as opposed to 35% a year ago.

“Operational excellence is showing results through improving customer retention, increasing user conversion and overall shift in unit economics,” the company said in a statement.

Nykaa Fashion’s growth has been slowing over the last few quarters, indicating a stagnation in the highly competitive fashion marketplace business. However, the ecommerce firm said its long-term investments in building platform capabilities and positioning the business for fashion-conscious consumers are paying off.

The company added that the Hot Pink Sale—its flagship sale event held in July—saw nine million unique visitors with an order-to-visit conversion rate of 1.3%.

Nykaa Fashion’s house of brands business continued to grow with a net sales value of Rs 45 crore for the quarter, a growth of 44% compared to last year. The key brands include Nykd, Twenty Dresses, RSVP,  Pipa Bella, and IYKYK, among others.

Edited by Kanishk Singh