Beauty and lifestyle retailer Nykaa will increase its focus on segments such as fashion as it targets an overall $180-billion addressable market in 2027 from $100 billion now, it said in its investor presentation on Friday. The company also said that it was maintaining growth rates ahead of the market and that segments such as premium fashion and beauty would gallop in terms of size as disposable incomes have improved in India.
For the March quarter of FY23, Nykaa’s parent FSN E-Commerce Ventures posted a 33.7% jump in revenue year-on-year to Rs 1,301 crore, but saw net profit fall a steep 70% to Rs 2.3 crore due to rising expenses. For the full year FY23, the Falguni Nayar-led company saw its revenue from operations increase to Rs 5,143.8 crore, 36% higher than last year. The net profit for FY23 fell around 50% to Rs 21 crore from Rs 41.3 crore reported in the previous fiscal.
Despite inflationary pressures and short-term challenges to discretionary spends, the company has been getting into newer areas, its investor presentation stated. The contribution from the company’s mainstay beauty and personal care (BPC) segment to consolidated gross merchandise value (GMV) sales has fallen to 68.2% in FY23 from 98.3% in FY19.
Fashion, on the other hand, has seen its contribution to sales grow to 26.4% in FY23 from 1.7% in FY19.
The company has also tapped areas such as men’s grooming, eB2B and health & wellness with Nudge in the last two years.
These segments, which fall in the others category in the company’s financial statements, contributed 5.4% to Nykaa’s consolidated GMV sales in FY23.
The company is also betting big on the premium fashion and beauty segments, it said in its investor presentation, backed by an exponential growth in these markets and growing aspirations of consumers.
While premium beauty and personal care would expand to 55% of the overall BPC market size in India by 2026 from 45% now, the premium fashion market would grow 3.5 times by 2030, the company said.
“With currently 18 million high income and 115 million mid-upper households, and further shifts till 2030, there is large room for growth at the premium end of the market in fashion and beauty,” the company said.
In both the BPC and fashion categories, Nykaa has been driving its ‘house of brands’ strategy, including acquired and in-house labels, its presentation said.
In the BPC category, Nykaa has 12 brands, with the company’s owned brands contributing to Rs 789 crore, or roughly 12% to the segment’s GMV in FY23.
The company’s largest owned brand — Nykaa Cosmetics — clocked Rs 250 crore in GMV for the year, while Dot & Key (a brand acquired by the company) and Kay Beauty (a joint-venture with actress Katrina Kaif) have recorded annual GMV of around Rs 130 crore each.
For the fashion vertical, where it faces increased competition from rivals such as Reliance Retail, Trent, Shopper’s Stop and Flipkart group’s Myntra, Nykaa has acquired three and built 10 brands internally since FY20.
Seven of these 13 brands were launched in FY23 alone. According to the company, the largest brands in the fashion category are 20 Dresses and Nykd. While 20 Dresses has crossed Rs 150 crore annual GMV, Nykd – a women’s innerwear brand — has clocked Rs 85 crore in annual sales.