Nykaa’s Beauty and Fashion Business Thrives Amidst Overall Slowdown in Discretionary Spending
Nykaa’s Beauty and Fashion Business Thrives Amidst Overall Slowdown in Discretionary Spending
Despite a broader slowdown in discretionary spending, Nykaa, the fashion and beauty retailer, is optimistic about the growth of its beauty and personal care as well as fashion businesses in the first quarter of fiscal year 2024. According to a public filing, Nykaa anticipates the beauty and personal care segment to experience growth in the early twenties on a year-on-year basis, in terms of net sales value (NSV).
Similarly, the fashion vertical is expected to grow in the low to mid-teens on a year-on-year basis in NSV terms for the same period. NSV, which represents the sum of gross sales minus returns, allowances, and discounts, is a key metric in the retail industry.
Despite the challenging economic climate and reduced consumer spending, Nykaa remains confident in the resilience and demand for its beauty and personal care as well as fashion offerings. The expected growth reflects the company’s ability to capture market share and cater to consumer preferences in these sectors.
By providing high-quality products and a seamless shopping experience, Nykaa aims to continue driving growth and maintaining its position as a leading player in the fashion and beauty industry.
Nykaa, the Mumbai-based fashion and beauty retailer, has projected a mid-twenties year-on-year growth in its revenue for the first quarter, as stated in a public filing. Although specific numbers or further details were not provided, the company remains optimistic about its growth prospects. Nykaa highlighted the resilience of the beauty and personal care (BPC) categories, which continue to exhibit strong consumer demand, aligning with their long-term growth trajectory.
Despite the overall slowdown in discretionary spending, Nykaa’s confidence in the sustained demand for beauty and personal care products reflects the brand’s ability to cater to evolving consumer preferences and capture a significant market share.
By offering a diverse range of high quality products and ensuring a seamless shopping experience, Nykaa aims to capitalize on the ongoing consumer interest in the BPC segment and achieve robust revenue growth in the first quarter of fiscal year 2024.
The apparel industry has experienced the impact of a discretionary slowdown, particularly in small towns, during the quarter. However, despite this larger industry trend, Nykaa’s fashion business has shown relative resilience. The company has observed a gradual improvement in order volume, accompanied by a sustained average order value (AOV) year-on-year.
While the apparel sector has faced challenges, Nykaa’s ability to maintain a steady AOV indicates that customers are still engaging with the fashion offerings and making purchases. This resilience within the fashion segment is a positive sign for Nykaa’s business, demonstrating its ability to adapt to changing market dynamics and continue catering to consumer preferences. The sustained performance in fashion, despite the broader discretionary slowdown, reflects Nykaa’s efforts to provide a compelling shopping experience and relevant fashion choices to its customers.
Shares of FSN E-Commerce Ventures, the parent company of Nykaa, faced a decline of 2.19% and closed at Rs 140.8 on the Bombay Stock Exchange (BSE) on Friday. The stock has faced a challenging year on the stock markets, with a year-to-date decline of approximately 38%.
The decline in stock value indicates the challenges and market conditions the company has faced during this period. It’s worth noting that stock market performance can be influenced by various factors, including market sentiment, industry dynamics, and investor expectations.
In contrast to the final quarter of FY 2023, where Nykaa’s fashion business experienced a slowdown in growth due to a consumer pull-back in discretionary spending, the company’s fashion business grew by 38% to reach Rs 664.1 crore in gross merchandise value (GMV) terms during that period.
Similarly, Nykaa’s beauty and personal care (BPC) business, which is its largest segment, saw a year-on-year GMV increase of 29% to reach Rs 1,628.9 crore in the same quarter. These figures indicate a strong performance in both the fashion and BPC segments, despite the challenges faced by the fashion business in the broader market environment.
Nykaa’s financial performance for the March quarter of 2023 saw a significant decline in net profit, with a year-on-year fall of 71.83% to Rs 2.4 crore. However, the company’s consolidated revenue experienced growth, rising by 33.75% to Rs 1,301 crore during the same period.
For the full fiscal year of 2023, Nykaa recorded a 53% drop in annual profit, which amounted to Rs 19.26 crore. Despite the decline in profit, the company achieved a substantial increase in revenue from operations, which rose by 36% to reach Rs 5,144 crore for the fiscal year. These financial figures reflect the challenges faced by the company in terms of profitability, even as it continues to generate strong revenue growth.
