Myntra’s FY22 Loss Widens 40% To INR 597 Cr As Advertising Expenses Surge

Flipkart-owned fashion retailer Myntra reported a 40.5% increase in its loss to INR 597 Cr in the financial year 2021-22 (FY22) from INR 424.9 Cr in FY21 on the back of a rise in its expenses, particularly for advertisement and business promotion.

The bottom line took a hit despite a 45% year-on-year (YoY) rise in operating revenue to INR 3,501.2 Cr in FY22 from INR 2,407 Cr in FY21.

As a marketplace for fashion and beauty products, the Walmart-owned etailer earns the majority of its revenue from sale of various services. Its marketplace services generate revenue primarily from transaction fees that the vendors pay. It also earns from logistics services, advertisement services, and consultancy services.

The company’s total revenue, including other income such as income from royalty services and finance income, stood at INR 3,609.9 Cr in FY22 as against INR 2,466.6 Cr in FY21. 

It is important to note that in FY22 Myntra had received a fresh capital infusion of INR 492 Cr from its Singapore-based parent company FK Myntra Holdings ahead of last year’s festive season sales. 

Myntra’s total expenses surged almost 1.5X in FY22 to INR 4,206.9 Cr from INR 2,891.5 Cr in the prior fiscal year. The rise in advertising and promotional expenses, employee benefit expenses, and logistics charges was the main reason behind the jump in total expenses.

Myntra spent INR 1,205.9 Cr on advertisement expenses in FY22 as against INR 686.4 Cr in FY21. Together with other business promotion expenses, Myntra’s total marketing expenditure grew almost 70% to INR 1,298 Cr in FY22.

The cost of materials consumed stood at INR 1,770.3 Cr during FY22 as against INR 1,124.8 Cr in FY21, while logistics charges grew to INR 1,680.1 Cr from INR 1,066.3 Cr in the previous fiscal year.

Meanwhile, it is pertinent to note that with the easing of lockdown restrictions, Myntra made investments in two major areas — hiring and getting new office space.

In April this year, Myntra announced opening of its new corporate headquarter at a 300,000 sq ft workspace provided by IndiQube on lease in Bengaluru. It claimed that the space provided a seating capacity of 2,600 people, which was double of its earlier office space.

In fact, Myntra’s employee benefit expenses grew a little over 12% YoY to INR 521.2 Cr in FY22 from INR 464.7 Cr in the prior fiscal year. A majority of the increase was reported in salaries and wages, which stood at INR 359.3 Cr in FY22 versus INR 297.6 Cr in FY21.

After a major upheaval at Myntra’s top management level last year, Nandita Sinha was also appointed as the company CEO, effective from January this year.

Myntra’s outsourced manpower expenses stood at INR 128.9 Cr during the year as against INR 9.4 Cr seen in the prior fiscal year.

In the ecommerce space, Myntra competes with the likes of Amazon, Reliance Retail’s Ajio, Snapdeal, and new-age players like Nykaa, Zivame, among others. 

With increasing digital penetration and use of smartphones, ecommerce is currently one of the most booming industries in India. As per an Inc42 report, the Indian ecommerce market is set to surpass $400 Bn by 2030, clocking a compound annual growth rate (CAGR) of 19% between 2022 and 2030.