Q1FY24 Mumbai: FSN E-Commerce Ventures, the entity behind Nykaa, a prominent beauty and personal care (BPC) company, reported a nearly 27% drop in its profits for Q1FY24 compared to the previous year, amounting to Rs 3.3 crore.
This decrease was attributed to a slowdown in discretionary expenditures during the quarter.
In contrast, the company had reported a profit of Rs 4.6 crore in the corresponding quarter of the previous year, considering equity shareholders of the parent.
On a broader level, FSN E-Commerce Ventures achieved a net profit of Rs 5.4 crore in Q1FY24, marking an approximately 8% increase from the Rs 5 crore recorded in Q1FY23.
The company, headquartered in Mumbai, shared in a performance update filing on July 7 that inflationary pressures were subsiding, and the demand for beauty and personal care products remained robust in urban areas.
However, Nykaa Fashion, which is part of the company and operates in the apparel industry, faced challenges, especially in smaller towns, due to reduced discretionary spending.
During Q1FY24, the company's revenue from operations reached Rs 1,421.8 crore, reflecting a growth of around 24% compared to the Rs 1,148.4 crore reported in the corresponding period of the previous year.
Nykaa's gross merchandise value (GMV) witnessed a YoY increase of 24%, reaching Rs 2,667.8 crore in Q1 FY2024.
The company reported a substantial growth of 43 percent in its physical retail space on a year-on-year (YoY) basis, resulting in a total of 152 stores as of June 30, 2023.
During the quarter, Nykaa's profits were also impacted by increased expenditures, notably the costs associated with its workforce. Employee benefit expenses reached Rs 138.6 crore in the June quarter, marking a 22 percent rise compared to the Rs 114.8 crore spent by Nykaa in the same period during the previous fiscal year.
For Q4FY23, Nykaa had reported employee-related expenses amounting to Rs 127.3 crore.
Quarter-on-quarter (QoQ) basis, the profits displayed an uptrend with figures rising approximately 38 percent, transitioning from Rs 2.4 crore in the January-March period to Rs 3.3 crore in the three months ending in June, regulatory filings showed.
The revenue generated from operations displayed a notable increase from Rs 1,301.7 crore in Q4FY23 to Rs 1,421.8 crore in Q1FY24, indicating a shift of about 10 percent.
In contrast, Nykaa Fashion, overseen by Adwaita Nayar, the daughter of Falguni Nayar, witnessed a comparatively moderate growth rate of 12 percent on a year-on-year (YoY) basis. This resulted in achieving a gross merchandise value (GMV) of Rs 653.7 crore during the specified period.
"Nykaa Fashion’s growth in the quarter was much ahead of the industry growth but below its long-term trajectory," Falguni Nayar said.
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