SUMMARY
In its annual report for FY23, Nykaa CEO said that beauty categories of skincare, makeup, and fragrances will grow faster than personal care in the coming years
Falguni Nayar said Nykaa enjoys a premium in per capita spending for BPC and fashion categories and the company is confident about maintaining this premium going ahead
Weak consumer spending affected Nykaa’s performance for most of FY23, but Nayar said the company continues to prioritise the balance between growth and profitability while investing for the future
nykaa
expects beauty categories of skincare, makeup, and fragrances to grow faster than personal care in the coming years, with premium segments growing faster than mass segments, according to its CEO and MD Falguni Nayar.
It is pertinent to note that Nykaa’s beauty and personal care (BPC) segment has been witnessing better growth compared to its fashion vertical. In FY23, its BPC gross merchandise value (GMV) grew 33% year-on-year (YoY) to INR 6,649.1 Cr, which the company claims was helped by increasing category expansion, continuous improvements in customer experience, and “innovative” retailing.
In a message to shareholders in the company’s annual report for FY23, Nayar said, “We are focused on bringing the best of the world to India and building access across categories, price segments, and geographies with a vision to delight every beauty customer in India.”
In FY23, Nykaa’s total GMV jumped 41% YoY to INR 9,743.3 Cr, while the fashion vertical’s GMV stood at INR 2,569.6 Cr. The beauty and fashion ecommerce major said that BPC constituted over 68.4% to its GMV, while fashion accounted for over 26.4%. The remaining 5.2% GMV was attributed to new initiatives, including SuperStore by Nykaa.
Speaking further on the BPC vertical, Nayar said Nykaa’s BPC network of stores across formats of Nykaa Luxe, Nykaa On Trend, and Kiosks stood at 145 at the end of FY23, contributing to over 8% of the vertical’s total GMV.
Nayar said that the current per capita consumption for BPC in India stands at $15, while it is $54 for fashion. Nykaa currently enjoys a premium when it comes to spending on these categories and is confident of maintaining this premium even as the per capita spending is expected to surge in the coming years, in line with the economic growth of the country.
“The Nykaa consumer today spends $80 on BPC and $130 on fashion on our platforms and we remain confident that we should be able to maintain this premium over per capita consumption based on our superior customer profile,” Nayar said.
Though weak consumer spending amid the global economic slowdown affected Nykaa’s performance till Q3 FY23, much of the pressure faded in the last quarter of the fiscal year.
However, due to a sharp rise in certain expenses, Nykaa’s net profit nosedived almost 70% YoY to INR 2.3 Cr in Q4 FY23. For the fiscal year 2023, the startup’s net profit declined 49% YoY to INR 20.9 Cr.
However, its total revenue grew 36% YoY to INR 5,174 Cr in FY23.
Nayar said in the FY23 annual report that Nykaa continues to prioritise the balance between growth and profitability while investing for the future.
“Your company’s focus remains on creating a long-term sustainable value for all stakeholders,” she added.
In the first quarter of FY24, Nykaa bounced back with an 8.2% YoY rise in net profit at INR 5.4 Cr. Nayar had said during the publishing of the results earlier this month that the beauty vertical continued to shape into an ecosystem of its own.
