PepperFry loss widens to Rs 183 crore, now trails Urban Ladder

Loss-making company runs experience studios across 65 locations, covering 25 cities

Increasing competition and a year-long expansion effort has put PepperFry in the second spot. It is only behind Urban Ladder now, which emerged profitable last year.

 In the financial year ended March 2019, net losses at PepperFry jumped 172 per cent to Rs 183.5 crore, company documents accessed through Tofler showed. The figures put the Mumbai-based online furniture brand in contrast to rival Urban Ladder which posed a Rs 50-crore profit in the same period.

In the given year, total revenue saw 47 per cent increase to Rs 206.8 crore, while total expenses increased 58 per cent to Rs 390.3 crore. The figures are on standalone basis. Given the latest numbers, PepperFry now squarely trails Urban Ladder, long-time second-rung player, which posted Rs 434-crore sales. The latter has been gone through re-alignment and retrenchment to reduce costs.

In contrast, PepperFry has been on an expansion spree over the last 12-18 months, chief executive and co-founder Ambareesh Murthy had told Business Standard in a recent interview. 

In March 2018, the company raised Rs 250 crore from US-based State Street Global Advisors (SSgA) and took to opening new stores, expanding footprint in tier II markets and improving logistics and supply chain. Now, it runs experience studios across 65 locations covering 25 cities.

“Last year, we invested behind growth. This year we are getting all of the benefits of operational leverage which are accruing to us,” Murthy said in September. 

“We have established a fairly clear leadership for ourselves in the segment, and now is the time for us to start bringing in margin structures more in line with a business that is turning profitable.”

However, the top-line numbers point to pressure from increasing competition, not only from Urban Ladder but the entry of Amazon and Flipkart in the online furniture segment. Even Ikea, the popular Dutch furniture brand, entered India in 2018.

Unfazed, the founders want to take the company public in about two year. It is also expecting to raise some more equity funding — about $20-30 million in next six months, followed by another round just before the IPO, Murthy had said.

PepperyFry is the largest funded player in the space. It has so far raised around $200 million in equity funding from players such as Norwest Venture Partners, Bertelsmann India Investments, Zodius Capital and Goldman Sachs. 

Rival Urban Ladder is backed by Kalaari Capital, SAIF Partners, Sequoia and Steadview Capital.