Nykaa fashion: Cut in discretionary consumer spending impacted fashion business last quarter: Nykaa

A pullback in discretionary consumer spending continued to impact omnichannel retailer Nykaa’s fashion business for the January-March period, the company said on Wednesday. “Consumer pullback in discretionary spends has had some impact on our fashion business, leading to subdued growth in NSV (net sales value) this quarter,” the company said in a stock exchange filing.

“For Q4 FY23, we expect our percentage revenue growth rates in the fashion business to come through in the late teens,” it added. For the December quarter, Nykaa’s fashion vertical reported a 43% year-on-year growth in revenue from operations, and a 50% on-year growth in gross merchandise value (GMV).

“This comes on the back of our focus on business efficiency and unit economics. Our average order values and conversion rates have improved steadily,” it said.

The Mumbai-based company also said that its beauty and personal care (BPC) category sustained strong demand, partly aided by the ‘Pink Love’ sale introduced during the quarter.

“BPC business has seen higher year-on-year growth rates in Q4 FY23 as compared to the year-on-year growth rates seen in Q3 FY23. The operating parameters for the BPC business viz. average order values and conversion rates have been robust which has aided growth in revenue. For FY23, we expect our percentage revenue growth rates to be in line with the ones seen in 9M FY23, early-thirties,” Nykaa said in the filing.

Shares of Nykaa’s parent, FSN E-Commerce Ventures, surged 7.57% to Rs 136.40 on the BSE Wednesday.

“In Q4 FY23, against the backdrop of subdued industry growth, Tier 1 consumers have demonstrated sustained consumption. This has led to stronger revenue growth on the Nykaa platforms,” the company pointed out.Nykaa’s BPC business clocked Rs 1,263.4 crore in revenue from operations during the December quarter, marking an on-year growth of 26%. During the three-month period ended December 31, Nykaa witnessed its consolidated net profit decline 71% to Rs 8.48 crore.

While releasing the results for the third quarter of FY23 in February, Nykaa’s executive chairperson, managing director and chief executive Falguni Nayar had flagged the macroeconomic slowdown in consumption.

“We are seeing similar momentum continue in January and February. Unfortunately, a lot of listed company comparisons get governed by year-on-year comparisons and if you see a year ago, it was a very strong quarter, and growth had to be on top of a strong number,” the billionaire entrepreneur had told reporters following the results announcement.

“…if you look at the fourth quarter about a year ago (January-March 2022), it was taken off a bit because of Omicron fears, and because of that, on a year-on-year comparison it may not look so bad. But as far as the underlying demand for beauty is concerned, it is very strong,” Nayar had added.

ET earlier reported about a significant senior-level management shakeup at Nykaa with five members of its leadership team quitting in the first three months of 2023.

Chief commercial operations officer Manoj Gandhi, chief business offer of Nykaa Fashion Gopal Asthana, chief executive of wholesale business Vikas Gupta, Nykaa fashion’s Owned Brands business vice president Shuchi Pandya and the fashion unit’s vice president of finance Lalit Pruthi have left the company.

Prior to this, Nykaa’s chief financial officer Arvind Agarwal had quit in November last year and joined payments firm PayU.

The company in January appointed P Ganesh to replace Agarwal as CFO.

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