Pandemic impacted business but things are coming back, says Nykaa MD

FSN E-Commerce Ventures Ltd, which runs an online marketplace for beauty Nykaa, expects strong momentum in the business as the impact of pandemic recedes and the situation becomes normal

FSN E-Commerce Ventures Ltd, which runs an online marketplace for beauty and wellness products firm Nykaa, expects strong momentum in the business as the impact of the COVID-19 pandemic recedes and the situation becomes normal, according to a top official of the company.

Nykaa, which focuses on beauty, fashion and personal care commerce, has posted about a 57 per cent decline in consolidated profit after tax to Rs 29 crore in the third quarter ended December 31, 2021, after it more than doubled its marketing expense to acquire customers.

The company had registered a PAT of Rs 68.9 crore in the corresponding period last fiscal.

During the three quarters of the current financial year, its PAT was down 23 per cent to Rs 33.7 crore compared with Rs 43.7 crore in the year-ago period.

"We do believe that COVID-19 has had some amount of impact on our category, especially the make-up. During certain quarters, it was low compared to skincare, hair care and personal care that have gained.

"Cosmetics had suffered due to COVID-19. Those things have started coming back but we don't believe it is back to the pre-COVID-19 level of consumption," Nykaa Executive Chairperson, MD and CEO Falguni Nayar told PTI.

She said that last year, the company had put a brake on marketing expenses due to COVID-19 and, hence, this is a one-time impact that has reflected on the third quarter.

The company increased marketing expenses during the December 2021 quarter by 155 per cent to Rs 153.6 crore, from Rs 60.2 crore in the December 2020 quarter.

Nayar added that the company's gross margins increased to 46.3 per cent in the December 2021 quarter from 41.8 per cent a year.

"Our customers have increased by all standards, be it unique visitors. There is a huge improvement in all those numbers compared to a year ago.

"In our category, skincare, hair and personal care are fine but in make-up, we do believe as COVID-19 recedes, there should be stronger momentum. Some amount of fashion demand is back but again, it is not the same. Wedding entertainment travel has to open up," Nayar said.

The beauty and personal care (BPC) GMV of Nykaa grew 32 per cent YoY to Rs 1,533.3 crore in the December 2021 quarter.

The company's fashion GMV (gross merchandise value) more than doubled to Rs 510 crore and contributed 25 per cent to the consolidated GMV during the reported quarter.

"Physical retail stores are a little bit better now but they are not at the levels of the pre-festive season when people were going out. The first half of the festive season was good and then started falling off the cliff in December.

"It was slightly better than late December and early January (2022)," Nayar said.

Nykaa customer visits in the fashion category more than doubled to 11.5 crore in the fashion category and it grew 16 per cent in the BPC category to 23.2 crore in the December 2021 quarter on a year-on-year basis.

"Consumer behaviour,...how much people are ready to step out and socialise. All of these things are important for categories like beauty.

"That's why we think that the world will return to that type of behaviour and when that happens, we are preparing ourselves today by acquiring customers who will contribute when things return to normalcy," Nykaa.com CEO Anchit Nayar said.

Nykaa's consolidated revenue from operations, however, increased by about 36 per cent to Rs 1,098.36 crore during the December 2021 quarter, from Rs 807.96 crore in the December 2020 quarter.