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Nykaa makes investments to be ready for seasonally strong quarter ahead: CEO

10:20 AM Nov 16, 2021 | Agencies

Nykaa expects to continue its growth momentum in terms of revenue increase and Ebitda. CEO Falguni Nayar on Monday said the company has made significant investment to be ready for a seasonally strong quarter ahead.

Operated by FSN E-Commerce Ventures Ltd, Nykaa was listed on the stock exchange last week.

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The company has logged a 47 per cent jumped in revenue to Rs 885.3 crore, even as its net profit declined over 95 per cent to Rs 1.2 crore, on account of higher marketing spend during the September 2021 quarter as compared to the year-ago period.

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''In our industry, the second half is a stronger quarter compared to first because starting early October, the festive season begins, followed by the wedding season and other celebratory aspects, including year-end...in the September quarter, a lot of investment is done to acquire customers and be ready for a seasonally strong quarter,'' Nayar told PTI.

It is a conscious decision to continue to invest in customer acquisition for being ready for the busy season that starts in October, she said adding that the company is witnessing strong demand across beauty and fashion categories.

''We will continue the growth momentum in terms of both revenue growth as well as EBITDA...we would like to continue to grow at a strong pace because we think the addressable market size is very large.

''In our mind, profitability is a balance objective — to balance profitability and growth rather than only chase profitability or only chase growth,'' she said.

Ebitda stands for earning before interest, tax, depreciation and amortisation.

Nayar stated that the company had held back on marketing spends last year on account of the COVID-19 pandemic, which is not the case this year. The company's marketing and advertisement expense stood at Rs 121.4 crore in the September 2021 quarter as against Rs 31.5 crore in the year-ago period.

''We are building more for the future in terms of spending on marketing.

''So, our marketing spend for the first half is 12.5 per cent and September quarter is 13.7 per cent (compared to 5.2 per cent in September 2020 quarter) and that is positively reflecting in the unique customer visits,'' Nayar said.

Nykaa's beauty and personal care GMV (gross merchandise value) grew 38 per cent year-on-year to Rs 1,185.9 crore, while fashion GMV grew by 215 per cent y-o-y to Rs 437 crore.

Its monthly average unique visitors increased to 21 million with y-o-y growth of 62 per cent in beauty and personal care vertical and to 16 million with y-o-y growth of 328 per cent in the fashion vertical. Annual unique transacting customers reached 7.2 million with y-o-y growth of 40 per cent in beauty and personal care vertical, and 1.3 million with 417 per cent y-o-y growth in fashion vertical.

Nykaa has accelerated store expansion this quarter, with eight new physical retail stores across the country including stores in Gwalior, Kochi, Mysore and Ranchi. Its total operational physical store was 84 as of September 30, 2021.

''At the end of March, we had about 70-plus stores and they were in 40 cities and we have clearly taken a call to be in about 100 cities in the country. So, there's a long momentum further ahead, where I think we'll be adding at least locations in 40-50 more cities in the country,'' Nayar said.

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