A top online fashion and beauty platform, Nykaa saw a drop of more than 3.5% in its shares early on Thursday. Although there was an optimum boost in the overall revenue of the company in Q3, majorly due to high consumption by the Tier 1 clients, such a result was seen in the January-March quarter.
Created in 2012 by veteran investment banker Falguni Nayar, They began as an online retailer of cosmetics and beauty products but has now grown to sell products for personal care, wellness, and fashion as well. They features its in-house line of cosmetics and skincare items in addition to a large selection of products from worldwide and Indian brands.
The business runs offline storefronts in numerous Indian cities in addition to having a significant online presence. They has established itself as a reputable brand in the Indian beauty and wellness sector emphasising delivering a flawless client experience.
The company debates, that a fall in shares was seen in lieu of a major drop in customer spending in the industry during the time (Q3). Nykaa spokesperson stands firm on their belief of making substantial growth in order values and conversion rates in the fourth quarter revenue, which will in time shoot the shares up.
The brand publicly accepts its future improvement areas, enhancing operational effectiveness and unit economics in the fashion sector. In its legal documentation, They dives deeper into its fallbacks, where the prime blame falls on consumers’ reduction in discretionary spending. This has seen an impact on the dampened NSV (Net Sales Value) in Q4.
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Nykaa’s Growth Strategy Pays Off: Strong Sales Performance and Innovative Approach in Beauty and Wellness Sector
Nykaa expects their business’s percentage sales growth rates, particularly in fashion, to be in the late teens for Q4 FY23. The customer-centric strategy and innovation of Nykaa in the beauty and wellness sector have also received praise. They stated that the Pink Love sale, which was introduced in February, helped in boosting demand in the BPC – beauty and personal care category, which accounts for the majority of its sales.Â
When comparing sales of the past quarters, Nykaa says that Q4 FY23 experienced stronger year-over-year growth rates than Q3, an applaudable feat. Average purchase values and conversion rates, the operating factors for usual BPC (beauty and personal care) businesses, have been strong for Nykaa as well. This has aided in revenue development.
The brand anticipates that for FY23, its percentage revenue growth rates will be in the low to mid-thirties division. While Tier 1 clients have helped Nykaa to raise its overall earnings, the Q4 drop was disappointing looking at the previous success of the company.
Nykaa’s Strong Revenue Growth in Recent Years Overshadowed by Q4 Profit Decline and Executive Resignation
Nykaa also stated that a thorough performance update will be published once the approval of certified financial statements for Q4 FY23 is received.
Both the company’s revenue and its customer base believe to have grown quickly in its fresh years. Around INR 2,000 crore (roughly USD 267 million) in earnings was recorded by Nykaa in 2020, reflecting a 38% increase from 2021.
But in more recent times, due to decreasing disposable incomes, store additions, and greater employee compensation expenses, Their net profit in the last quarter fell 71% from Q3 in the financial year 2022. Despite a 33% increase in sales, other costs also reduced profitability throughout the quarter.
Due to increased competition and declining stock valuations, five senior Nykaa executives submitted their resignations as part of the yearly evaluation and transition process in March end.
Read More: Nykaa’s Chief Financial Officer, Arvind Agarwal resigns
