Mumbai: FSN E-Commerce Ventures Ltd (referred as “Nykaa” or the “company”), has announced its financial results for the quarter ended 31 December 2023.
Financial Highlights:
• Financial Highlights Summary:
o GMV grew 29 per cent YoY to ₹ 36,194 million in Q3 FY2024
o Revenue from Operations grew 22 per cent YoY to ₹ 17,888 million in the quarter.
o Gross Margin grew 20 per cent YoY to ₹ 7,607 million in the quarter. Gross Margin stood at 42.5 per cent.
o EBITDA grew 26 per cent YoY to ₹ 988 million in Q3 FY2024.
o EBITDA margin was 5.5 per cent in Q3 FY2024 vs 5.3 per cent in Q3 FY2023. Adjusted for ESOP and new Business expenses (multi-brand retail operations in GCC, ‘Nysaa’), EBITDA margin was 6.1 per cent for Q3 FY2024
o Profit before Tax grew 109 per cent YoY to ₹ 265 million in Q3 FY2024 and,
o Net Profit for the Period grew 106 per cent YoY to ₹ 175 million.
o PAT Margin was 1.0 per cent in Q3 FY2024 vs 0.6 per cent in Q3 FY2023.
• The consolidated revenue from operations continues to grow at a strong pace of 22 per cent YoY, totaling ₹ 17,888 million for the quarter.
• We continue to drive improvement in profitability. EBITDA margin expanded to 5.5 per cent for the quarter, a growth of 26 per cent YoY driven by direct and indirect costs efficiencies. Fulfilment cost as a per cent to Revenue stood at 9.6 per cent for the quarter, compared to 10.7 per cent in Q3 FY2023. Similarly, employee expense as a per cent to Revenue stood at 8.3 per cent for the quarter, compared to 8.7 per cent in Q3 FY2023, witnessing improvements through the last few quarters.
• During the quarter, we rolled out the ESOP grants for critical and top talent across the organization levels, which is now reflecting in our employee expenses. Adjusted for ESOP and new business expenses (multibrand retail operations in GCC, ‘Nysaa’), our EBITDA margin would have been 6.1 per cent.
• PBT and Net Profit witnessed strong growth of 109 per cent YoY and 106 per cent YoY, and stood at ₹ 265 Million and ₹ 175 million, respectively.
Business Highlights:
Beauty & Personal Care (BPC)
• The consolidated BPC GMV witnessed an industry leading growth of 25 per cent YoY, as we continue to gain share while being the largest specialty beauty retailer of the country. NSV growth stood at 20 per cent YoY primarily due to higher discounting by brands in mass and masstige segment.
• Physical retail footprint continues to expand with 39 new stores launched over the last 4 quarters, totalling 174 stores as of December 31, 2023. The retail business now contributes to over 9 per cent of the overall BPC GMV while also continuing to improve profitability. This is reflected in EBITDA improvement of 35 per cent YoY. Our retail stores are critical to omnichannel strategy of premium brands. 85 plus premium brands are present across our store network and contribute over 2/3rd to our offline GMV.
• Our owned brands in beauty experienced a strong GMV and NSV growth of 40 per cent YoY and 36 per cent YoY respectively with 3 brands witnessing significant scale. Dot & Key – our new age D2C skin care brand is now at a Rs. 5,000 million GMV run rate, scaling 8x since its acquisition. Nykaa Cosmetics continues to receive much customer love and has achieved a Rs. 4,000 million GMV run rate. Kay Beauty, India’s largest celebrity beauty brand, has witnessed rapid growth and acceptance, achieving over Rs. 2,000 million GMV run rate, within 4 years of launch.
• Nykaaland hosted in Nov 2023, was India’s biggest beauty festival held in Mumbai over 2 days, which saw 15,000 plus attendees and participation from a unique assortment of 80 plus global and local brands across categories. The first-ever festival featured brand booths, along with masterclasses, interactive games, installations, music, food and more. Close to 5,000 participants attended 12 masterclasses hosted by industry experts. Acclaimed american makeup artist Mario Dedivanonic brought his masterclass to India for the first time at the festival. This innovative first of its kind event, received overwhelming positive response from both brands & consumers. The event generated significant online reach with over 5.5 billion impressions.
Fashion
• This fashion GMV witnessed a strong growth of 40 per cent YoY led by strong growth across all metrics. Our annual unique transacting customer (AUTC) grew at 23 per cent YoY to 2.9 million, Order growth at stood at 19 per cent YoY and AOV were up 18 per cent YoY, as on December 31, 2023.
• Our fashion business is showing consistent improvement in profitability reflecting our platform strength and quality of our customers. Contribution margin as a per cent to NSV for Nykaa Fashion improved by 510 bps and stood at 6.0 per cent in Q3 FY2024 vs 0.9 per cent in Q3 FY2023. This was supported by strong improvement in our marketing expenses, down to 23.9 per cent vs 28.6 per cent a year ago.
• During the quarter, we entered into a long-term strategic partnership with Foot locker, a New York-based specialty athletic retailer. Nykaa Fashion will serve as the exclusive e-commerce partner and operate Foot Locker's India website and retail authorized merchandise on Foot Locker branded shop on Nykaa’s existing ecommerce platforms. This partnership strengthens Nykaa’s position as a destination for premium curated assortment.
Others/New Businesses
• New businesses at Nykaa, which includes our distribution business, (which primarily constitutes Superstore by Nykaa), Nykaa Man, International, content led platform LBB and our wellness brand Nudge, continues to further our BPC industry reach. New Businesses NSV of ₹1,309 million at Q3 FY2024, is now a meaningful share of business.
• The distribution business continues to grow exponentially, with NSV growth of 88 per cent YoY during Q3 FY2024. Within 2 years of launch, Superstore scaled up over 31x on GMV and now serves almost 1.5 Lakhs transacting retailers across 950 cities as on December 31, 2023.
• The distribution business has achieved scale with improving profitability with contribution margin as a per cent to NSV improving 766 bps YoY. This is supported by several initiatives which led to improvement in pre delivery leakages, optimization of fulfilment and selling & distribution expenses.
Pink Friday Sale
• This year our annual flagship sale “Pink Friday Sale” was hosted in Nov 2023 across our online platforms – Beauty, Fashion & Man as well as our offline stores. This unified sale across platforms has brought in record numbers this year, with about 50 million unique visitors across our platforms and stores in 10 days.
o Beauty: Being India’s largest beauty sale, the beauty numbers have witnessed exponential growth scaling 10x over the last 5 years. The rise of disposable incomes driving premiumization is evidenced strongly by the demand for luxury products witnessed during this Pink Friday. Premium and Luxury brands outperformed contributing 1/3rd to overall GMV and growing at 32 per cent YoY.
o Retail Stores: The growing love for Pink Friday Sale led to 50 per cent increase in footfall compared to regular days. With higher conversions, the GMV grew even faster than footfalls, witnessing 67 per cent YoY growth.
o Fashion: “Pink Friday Sale” for fashion has scaled significantly with 5x GMV growth over last 2 years and has grown over 85 per cent YoY. This was driven by strong improvement in order conversion along with Women’s western wear and bag and footwear category outperforming, with GMV growth of 120 per cent plus and 150 per cent plus YoY respectively.
Other announcements
The company’s board has approved group business restructuring initiatives towards bringing operational synergies by streamlining business operations across entities.
• Further investment by the company in Nykaa Fashion Ltd by way of rights issue: FSN E-Commerce Ventures Ltd is infusing additional equity into Nykaa Fashion Ltd to be utilised for repayment of loans given by the Company.
• Acquisition of Lingerie & Athleisure business by way of slump sale from Nykaa Fashion Ltd to FSN E-Commerce Ventures Ltd: The board has approved to consolidate the Athleisure and Lingerie business of Nykaa Fashion Ltd, which is a wholly owned subsidiary of the Company, into FSN E-commerce Ventures Ltd. This will help to streamline and consolidate owned brand business in a single entity in a phased manner, similar to beauty-owned brands business which are already within FSN E-commerce Ventures Ltd.
• Demerger of eB2B business from FSN Distribution to Nykaa E-Retail: The board has approved demerger of eB2B business “Superstore by Nykaa” from FSN Distribution Ltd to Nykaa E-Retail Ltd. This will help consolidate our online beauty business in a single entity. The proposed demerger will drive synergies in two businesses that have common physical and technology infrastructure, common brand partners as well as are involved in the retail/distribution of common products. The scheme is subject to necessary regulatory and stakeholder approval.
Our Consolidated results include results of wholly owned subsidiaries along with Kay Beauty, Dot & Key, Nudge, LBB and associate Earth Rhythm.
