Ready for a seasonally strong quarter ahead: Nykaa founder

Operated by FSN E-Commerce Ventures Ltd, Nykaa was listed on the stock exchange last week. The company has logged a 47 per cent jump in revenue to Rs 885.3 crore, even as its net profit declined over 95 per cent to Rs 1.2 crore, on account of higher marketing spend during the September 2021 quarter as compared to the year-ago period.

“In our industry, the second half is a stronger quarter compared to first because starting early October, the festive season begins, followed by the wedding season and other celebratory aspects, including year-end in the September quarter, a lot of investment is done to acquire customers and be ready for a seasonally strong quarter,” Nayar said. It is a conscious decision to continue to invest in customer acquisition for being ready for the busy season that starts in October, she said adding the company is witnessing strong demand across beauty and fashion categories.

“We will continue the growth momentum in terms of both revenue growth as well as Ebitda, we would like to continue to grow at a strong pace because we think the addressable market size is very large. “In our mind, profitability is a balanced objective — to balance profitability and growth rather than only chase profitability or only chase growth,” she said. Ebitda stands for earnings before interest, tax, depreciation and amortisation.

Nayar stated the company had held back on marketing spending last year on account of the COVID-19 pandemic, which is not the case this year. The company’s marketing and advertisement expense stood at Rs 121.4 crore in the September 2021 quarter as against Rs 31.5 crore in the year-ago period.

“We are building more for the future in terms of spending on marketing. So, our marketing spend for the first half is 12.5 per cent and September quarter is 13.7 per cent (compared to 5.2 per cent in September 2020 quarter) and that is positively reflecting in the unique customer visits,” Nayar said.

Nykaa’s beauty and personal care GMV (gross merchandise value) grew 38 per cent year-on-year to Rs 1,185.9 crore, while fashion GMV grew by 215 per cent y-o-y to Rs 437 crore.