With approximately 80% of Sugar Cosmetics’ stores having already reached the break-even point, the direct-to-consumer (D2C) startup aims to achieve profitability for all its remaining stores this fiscal year. The company has also aligned its brand-building and marketing investments accordingly.
“After rapidly scaling over the last 24 months, our FY25 plans are focused squarely on building operational efficiencies in the 200 stores. With our current presence across self-operated stores, modern trade stores, and general trade outlets, we are well-distributed to reach our target audience. Hence, we don’t expect the number of stores to go significantly up by this June,” Vineeta Singh, co-founder and CEO, told Fe. The company launched its 100th brand-owned exclusive outlet in June 2022, and year later launched its 200th store.
Singh said that as the brand scales across geography and demographics, its self-operated stores continue to be a significant part of its business and overall brand positioning.“December 2023 was the first month that the company turned profitable, and we have been able to continue the trend in Q4 when we have been profitable over January, February, and March 2024,” Kaushik Mukherjee, co-founder and COO, said.In FY23, the company reported an 89% increase in its operating revenue to Rs 420 crore.
Sugar Cosmetics, which is backed by marquee investors such as Elevation Capital, A91 Partners, India Quotient, Stride Ventures, and L Catterton, has raised approximately $85 million over six funding rounds.Founded in 2015 as a D2C startup, it forayed into the offline space in 2017. Today, it has an offline presence in 45,000+ retail outlets across 550+ cities in India, including 200 of its own branded stores.Out of the 200 brand-owned exclusive outlets, 74 are on the high street and the rest in malls.
The company says its high-street stores have found significantly higher attraction in tier 2 and 3 markets. Approximately 60% of the exclusive stores are in tier 2 and 3 cities and thus the company is not aggressively looking to scale them further right away, as it feels it is already well distributed considering the current scale. Sugar Cosmetics plans to sustain its growth without increasing expenses by maintaining price parity and staying away from scaling at the back of discounts. This, the company believes, is the only way to build true consumer stickiness and brand love.
“As we scale, our marketing and branding expenses decrease as a percentage of the P&L which continues to benefit the brand and its bottom line. This is what we saw in the last fiscal and will continue to compound in the current one,” Mukherjee said. The company is not looking at geographical expansion beyond India at present. Further, besides building operational efficiencies in its offline stores, it will also be scaling Quench Botanics, a Korean skincare brand launched by the co-founders last year as a joint venture with actor Kareena Kapoor Khan.