Beauty and fashion firm FSN E-commerce, which operates Nykaa, posted a 66% jump in profit after tax (PAT) year-on-year to Rs 13 crore compared to Rs 7.8 crore a year ago.
Revenue from operations stood at Rs 1,874.7 crore, up 24% from Rs 1,507 crore in Q2FY24. Ebitda stood at Rs 103.7 crore, up 29% y-o-y with Ebitda margin at 5.5%, up 19 basis points. Adjusted Ebitda margin (before ESOP expenses, GCC business and organisational restructuring expenses) came in at 6.2%, up 70 basis points over last year.
Consolidated GMV for Q2 stood at Rs 3,652.5 crore, up 24% from Q2FY24, driven by a steady 29% growth in the beauty and personal care (BPC) segment. The beauty segment’s GMV grew to Rs 2,783.3 crore from Rs 2,542.9 crore a year ago, while fashion segment GMV grew 10% to Rs 863.3 crore.
Revenue from the BPC segment grew 24% to Rs 1,702.9 crore and the fashion segment’s revenue rose 22% to Rs 166.1 crore in Q2FY25.
Nykaa’s cumulative customer base grew 31% annually to 37 million in Q2FY25, the company said.
Discounting in the beauty segment has started to moderate, the management added, though it continues to be elevated in some pockets. “There is a retailer-funded discounting from horizontals that continues as there is a softness in their other core categories like fashion, there is an aggressive play on the beauty side, but it is starting to moderate slightly from the peak,” Anchit Nayyar, ED and CEO – beauty e-commerce, FSN E-commerce, said in an analyst call.
On the fashion front, Nykaa said the first half was muted on account of seasonality and because of the festive and wedding season being concentrated in the second half of FY25.
“I wanted to point out that the strong content revenue in LBB, the subsidiary that is acquired by fashion business is responsible for strong growth in revenue growth momentum in the fashion business,” Falguni Sanjay Nayyar, MD and CEO, FSN E-commerce, said during the company’s post-earnings call.
New customer acquisitions grew 31% for the beauty multi-brand retail segment, while annual unique transacting customers grew 22% (13.7 million in Q1FY25 vs 11.3 million in Q1FY24). The total number of orders was up 24% y-o-y at 12.9 million.
The company’s physical store count stood at 210, adding 10 new stores in the three-month period. The new additions include 2 new flagship stores, a format that, the Nykaa management said, will see a footprint expansion going forward.
Quick delivery of up to 3 hours for select items soon
Nykaa will soon begin delivery of some of its products in 30 minutes to 3 hours from the time of placing the order. The quick delivery service, called Nykaa Now, will not be across the board for beauty products, but for selected items that have the potential to grow wider.
“These are products that consumers buy more like every day essential products rather than as a more deliberate beauty purchase. And for us to continue to dominate market share in those SKUs and in those subcategories, we do think it is important to be competitive in certain metros for certain parts of the (product) assortment from a quick delivery perspective, meaning 30 minutes to three hours,” said Anchit Nayyar, ED and CEO – beauty e-commerce, FSN E-commerce said.
He added that not all products in the Nykaa BPC portfolio will lend well to quick-commerce since beauty is a long tail segment that entails discovery as part of the customer journey. For example, if a consumer wants to buy a foundation, he explained, there are 30 shades that suit the Indian skin and such products usually are more deliberate purchases.
“So, there are large parts of our business that are not addressable by quick-commerce, at least not in a very affordable and sustainable way. So, we are not looking to try to do 30-minute delivery for that part of the assortment,” Anchit Nayyar said.
He added that the company can execute 30-minute to 3-hour deliveries for certain products profitably, without a large capex infusion.
“In the interest of always being better every day and always providing a superior experience to the consumer, there are parts of the portfolio for which we are looking to build these capabilities,” he said.
Quick commerce has been the focus for growth among many digital delivery platforms, including Swiggy and Zomato. Flipkart has also launched its q-comm platform — Flipkart Minutes — for which is undertaking on-ground promotional drives.
While Nykaa will not chase q-commerce across its product portfolio, it is continuing efforts to be able to fulfill order in the same day-next day window. In Q2, it said that 70% of the orders in the top 110 cities were fulfilled on the same day or the next day.