Nykaa Q1 results: Net profit rises 33 per cent to Rs 4.5 cr; revenue up 41 per cent

The parent company of Nykaa, an online cosmetics retailer, FSN E-Commerce Ventures, stated on Friday that its consolidated net profit increased by 33.4% to Rs 4.55 crore for the first quarter ended June 30, 2022. The business reported a net profit of Rs 3.41 crore at the same time last year.

The beauty e-commerce platform’s profit decreased by 47.6% sequentially from Rs 8.56 crore in the preceding quarter (Q4FY22).

The company’s operating revenue increased by 40.5% to Rs 1148.421 crore in the reported quarter from Rs 816.991 crore in the same quarter of the previous fiscal year.

Gross merchandise volume (GMV) for Nykaa increased by 47% YoY to Rs 2155.8 crore during the quarter.

Additionally, its EBITDA increased 71% to Rs 46.1 crore in Q1FY23. EBITDA margin as a share of operating sales increased to 4% from 3.3% in the same quarter previous fiscal, driven by an increase in gross margin and cost-effective fulfilment, Nykaa said in a regulatory filing.

Commenting on the results, Falguni Nayar, Executive Chairperson, MD, and CEO, said, “The beauty sector, both online and offline, is seeing tremendous momentum while increasing efficiency throughout the value chain. We are currently observing the beneficial impact of scale on our unit economics due to the substantial discipline we maintained in our retail store business during the COVID-affected times, especially with the resumption of offline purchasing behaviour. We are preparing for a good holiday this year as consumer demand for health, personal care, and beauty products are improving.”

“With advancements in platform experience and assortment depth, we continue to invest in developing a distinctive client proposition in fashion. In addition, we expanded our portfolio of purpose-driven owned brands by acquiring Kica and launching Twig & Twine, Gloot, and Azai. These foundational elements, in addition to the industry’s resurgence as a result of factors like improved mobility and travel, are the reasons why fashion had a sequential increase between Q3 and Q4 of last year,” Nayar remarked,

“We are still committed to funding the future’s growth engines, including Superstore by Nykaa, Nykaa Man, and global operations. Our goal in each of them is to develop the business model sustainably. We are seeing encouraging revenue growth in these endeavours, which gives us hope for our goals.,” she added.

Shares of the company on Friday closed 1.69 per cent lower at Rs 1,420 apiece on BSE.

About Nykaa

Nykaa is a beauty item retailer that offers both online and offline sales of men’s underwear and clothing, and cosmetics. The company also offers a wealth of content, including product reviews, beauty how-to videos, essays written by experts in the field, and even an online beauty magazine. The Nykaa helpline is designed to help customers choose products and services that meet their needs. The products are genuine because they are purchased straight from the producers and are also made available for delivery by the cosmetic and pharmaceutical companies!

In addition to the rest of the Indian subcontinent, the company currently ships its products to Nepal and will soon do the same for many other countries.

Falguni Nayar, the company’s founder, was initially inspired by the inconsistent nature of the beauty products market. India’s beauty and cosmetics market was unable to match the product selection available in other nations like France and Japan, despite the substantial market demand. Additionally, it was discovered that the products were inaccessible in several places around the country, which all helped to inspire the development of Nykaa.

In the year 2012, Falguni Nayar founded the company. With only three people and little experience in the retail industry, technology, or the manufacturing of cosmetic items, Nayar established Nykaa. The business was founded in 2012, and in its early days, it had received about 60 orders. Nykaa didn’t give in on its price guarantee, though. Yes, the rates may have been reduced to increase sales, but that wasn’t what happened.

The founder and CEO of the company once said, “We’d rather sell the right shade of lipstick at full price than the wrong shade at half price.”

 One of the brand’s key goals is to make ordinary ladies remarkable in every way.

How Did Nykaa Become So Successful?

For the overall Indian startup environment, the past ten years have been largely favourable. In the competitive Indian market, many potential companies have developed and successfully established themselves. Some even succeeded in becoming unicorns, a status that each company entrepreneur hopes to one day achieve.

But one business stood out from the crowd, breaking records by becoming this year’s only profitable unicorn to go public and making a sensational launch on the stock market. The startup is none other than Nykaa, India’s top cosmetics company.

Let’s look deep then and try to answer the question on everyone’s mind: How Did Nykaa Become So Successful?

The expansion of Nykaa was fueled by many causes. Here are some of the most significant ones that Nykaa got precisely right:

• Nykaa solves a unique problem with a unique solution

The rise of the internet was evident by the beginning of 2010. The emergence of businesses like Flipkart and SnapDeal made online purchasing commonplace.

Everything was accessible with only a click, including dining tables and literature. However, clients had no options for purchasing real, completely vetted beauty and wellness items online.

This is where Nykaa came in and hit the bull’s eye!

Through partnerships with domestic and international beauty and wellness companies, Nykaa began offering genuine goods directly on its e-commerce platform.

Customers finally had a reliable online store where they could purchase beauty and wellness items without having to leave the comfort of their home, thanks to the company’s curation of a wide variety of products and product categories, supported by the assurance of genuineness.

• Nykaa started small but had a crystal-clear vision

Nykaa adopted a different strategy from most new-age entrepreneurs, who launch their businesses by offering steep discounts on their goods and services to attract as many clients as possible.

The company started a gradual but steady start and didn’t rely on low prices to attract new clients. Their vision was clear – to provide quality products at fair prices.

The leadership team also ensured that their marketing spending stayed within reason and in line with their brand’s core values.

This profitability over growth strategy enabled them to become profitable from the start, which is still a distant possibility for most modern businesses.

The company acquired the ability to take chances and become bolder and better thanks to a continuous stream of inflowing capital.

• Nykaa defined its core target audience brilliantly

From the beginning, Nykaa had little trouble cutting through the noise and reaching out to its clients. And only because of its firmly established core target demographic was this even possible.

Nykaa concentrated on serving women and girls in the middle to the upper middle class who desired to seem polished and self-assured, whether at a party or the office.

The company established a solid rapport with its target market thanks to this intentionally constructed niche, which also provided them with the option to adjust to their consumers’ needs.

• Nykaa’s innovative marketing strategy

The marketing plan for Nykaa was entirely in line with the purchasing habits of their target demographic.

The marketing team understood how hectic the lives of its customers were and how difficult it would be for them to leave their houses to purchase cosmetics and health items. As a result, they decided to launch online-only stores only.

Instead of waiting for customers to come into the store, Nykaa reached out to them directly in this manner.

The company targeted particular audience demographics for their online-only presence and used video-based content strategy in addition to more general online media strategies like SEO, influencer marketing, and email marketing.

The target group was particularly captivated by the video material, which greatly aided Nykaa in establishing a solid customer base.

• Nykaa’s entry into the Retail Market at the right time

Within a few years of its launch, Nykaa had established itself as a major player in the e-commerce space and felt the need to grow. To become the largest beauty & wellness brand in the nation, the company opened its first physical location in 2015.

It successfully established an omnichannel presence and allowed its consumers to see various products in person with the launch of its first physical location.

Additionally, retail establishments made sure more people learned about them, boosting the company’s recognition throughout various age groups and urban areas.

• Nykaa launches Nykaa Fashion & Nykaa Man

Nykaa was eager to take its next big step after successfully executing its retail store strategy by opening more than 70+ outlets across different Indian cities in only three years.

A curated marketplace for fashion and leisure products, Nykaa Fashion, was introduced in 2018 as the company’s new vertical. The company expanded its product categories under Nykaa Fashion to include goods for women, men, children, and households.

And when Nykaa Fashion was a hit, the company took a big risk and unveiled Nykaa Man, a platform devoted just to men’s grooming.

These bold moves paid off for them and aided in its growth into a multi-brand company across the country.

• Nykaa’s pivot-driven approach

In 2020, Nykaa’s activities were bound to be impacted when the Coronavirus was wreaking havoc. Businesses were only permitted to sell necessities due to the entire lockdown throughout the nation, which the company’s product line lacked.

However, its crew rose to the challenge and displayed adaptability and resilience at a crucial moment.

The company quickly changed course and opened an online store that sold necessities solely. The items included necessities for good hygiene, such as hand sanitisers, face masks, and hand soap, to name a few.

Conclusion

Overall, Nykaa’s tale of success can be described as one of a clear vision supported by decisive actions carried out at the appropriate periods. It’s also important to note that their team didn’t only concentrate on growing their brand; they also made sure that all of their partners, from fashion houses to castor oil producers, prospered and were a part of their success story.