After bumper listing, Nykaa reports 96% decline in Q2 net profit

Revenue up 47% YoY to Rs 885 crore

Fashion and cosmetics online retailer Nykaa’s net profit fell 96 per cent to Rs 1.1 crore in the September quarter (second quarter, or Q2) on a year-on-year (YoY) basis and 69 per cent, compared with the June quarter.

The company, which hit Rs 1 trillion in market capitalisation after listing on the bourses last week, saw its revenue from operations increase 47 per cent to Rs 885 crore on a YoY basis.

Nykaa’s marketing and advertising expenses grew 286 per cent to Rs 121 crore in the September quarter, compared with Rs 31.5 crore in the year-ago period. However, the company said its gross profit margin improved 345 basis points to 39.3 per cent in the September quarter, compared with the corresponding quarter of the previous financial year.

“We have maintained growth momentum in our beauty business, accelerated our fashion business, and focused on building the brand with strong marketing campaigns — both digitally and mass media,” said Falguni Nayar, chief executive officer and founder of Nykaa.

“Increased marketing spends has led to acceleration of customer acquisition, also evident in the unique visitor and transacting customer metrics. The company continues to invest in expansion of retail stores and fulfilment capacity ahead of the festival season,” she added.

The fashion portal’s beauty and personal care segment saw its gross merchandise value (GMV) grow 38 per cent to reach at Rs 1,186 crore in Q2 of 2021-22 (FY22). The fashion segment’s GMV grew 215 per cent YoY to reach Rs 437 crore.

The fashion segment’s contribution to consolidated GMV increased to 27 per cent in Q2FY22, compared with 14 per cent in Q2 of 2020-21.

The portal saw its monthly average unique visitors increase to 21 million, with YoY growth of 62 per cent in beauty and personal care vertical, and to 16 million, with YoY growth of 328 per cent in the fashion vertical.

Meanwhile, annualised unique transacting customers reached 7.2 million, with YoY growth of 40 per cent in beauty and personal care vertical, and 1.3 million, with YoY growth of 417 per cent in the fashion vertical.

With the evolving operating environment, Nykaa has accelerated store expansion this quarter, with 8 new physical retail stores across the country, including stores in Gwalior, Kochi, Mysuru, and Ranchi. Its total operational physical stores was 84 as of the quarter ended September.

The omnichannel retailer expanded its warehouse storage space by 37,000 square (sq.) feet (ft) during Q2FY22, which resulted in total warehouse space of 665,000 sq. ft as of the quarter ended September.