Nykaa Reports 24% Year-on-Year Surge in Q1 Operating Revenue

Beauty retail giant Nykaa has released its financial performance report for the first quarter of fiscal year 2023-2024, showcasing a blend of successes and challenges. The company's operating revenue surged by 24%, reaching Rs 1,421 crore from Rs 1,148 crore in the corresponding period last year. However, this growth was counterbalanced by a corresponding 23% increase in total expenses, which ultimately impacted the firm's bottom line.

Nykaa's attributable profit to equity shareholders recorded a decline of 27%, dropping to Rs 3.3 crore in Q1 FY24, down from Rs 4.5 crore the previous year. This decrease is largely attributed to a deceleration in growth within the fashion segment. Nevertheless, the profit after tax, inclusive of non-controlling interests, stood at Rs 5.4 crore, reflecting an 8% improvement compared to the same quarter in the previous fiscal year.

The company's gross merchandise value (GMV) within the beauty and personal care (BPC) business—Nykaa's primary revenue contributor—saw a commendable 24% year-on-year expansion across its diverse channels including e-commerce, physical retail, and consumer brands. A substantial traction of 10.3 million annual transaction customers was recorded in the last quarter. Notably, nearly 80% of the GMV was attributed to existing consumers, signifying robust and sustainable customer acquisition efforts.

Nykaa's offline retail space experienced a substantial 43% growth in comparison to the previous year, boasting 152 stores by the end of June 2023. Despite a 12% growth in GMV within the BPC segment in the April-June period of FY24 due to market sentiment challenges, strategic sales events such as the Hot Pink Sale in July reinvigorated momentum, ensuring healthy year-on-year growth.

The company achieved an impressive annual unique transacting customer base growth of over 160%, totaling 2.6 million in Q1 FY24. The average order value for the platform reached Rs 4,400, further emphasizing customer engagement. Despite the fashion segment's performance being ahead of industry growth, Nykaa's CEO, Falguni Nayar, acknowledged its trajectory was slightly below its long-term projection.

Nykaa's Q1 FY24 performance reflects a dynamic landscape where revenue growth and increased expenses present a nuanced picture of the company's journey. While challenges within the fashion segment weighed on profitability, strategic initiatives such as sales events and offline expansion demonstrate the brand's resilience and commitment to long-term growth. As Nykaa continues to navigate the evolving market, its ability to adapt and innovate remains a key factor in its ongoing success.