The December quarter saw a 71% decline in net profit for beauty retailer Nykaa as category changes in its most profitable beauty and personal care division and higher holiday discounts, among other significant expenses, squeezed margins. In line with analysts’ projections, the Falguni Nayar-led ecommerce company’s revenue increased 33% year over year to Rs 1,463 crore, while net profit plummeted to Rs 8.5 crore from Rs 29 crore in the comparable year-ago period. The third quarter’s overall spending increased by 36% year over year to Rs 1,456 crore. Nykaa’s EBITDA margin went down from 6.3% to 5.3% because employee benefits and other costs went up.
In a post-earnings call, MD and CEO Falguni Nayar stated that lower consumer discretionary spending had an impact on margins. She also stated that Nykaa plans to open 50 new offline stores in 2019. The company, which is primarily an online-first brand, had 135 stores in India as of the third quarter of last year, up from 95. Nevertheless, the company anticipates that the last quarter of its fiscal year will be “decent” and “more interesting” because of the wedding season in India and its ongoing Pink Love sale.
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Gross merchandise value (GMV), which measures the total value of all products and services sold on the platform without accounting for discounts or other similar factors, increased by 37% across all segments to Rs 2,796 crore for the Mumbai-based company. Nykaa’s largest revenue-producing segment, beauty and personal care, saw a 26% increase in GMV to Rs 1,901 crore, while the fashion segment increased by 50% to Rs 724.4 crore. The number of monthly active users in the BPC segment reached 24.2 million, up 22% from the previous year. Monthly active users at Nykaa increased by 18% to 19.4 million. According to a statement from the company, the GMV growth for Nykaa’s Pink Friday Sale in November was 40%.
