FSN E-Commerce Ventures, which operates beauty and personal care (BPC) company Nykaa, saw its net profit increase by 50 percent to Rs 7.8 crore in Q2FY24 from Rs 5.2 crore in Q2FY23 , led largely by its fashion business which witnessed a strong demand during the quarter.
Nykaa's BPC unit saw strong demand during the flagship sale event in July which also provided a boost to the bottom line.
The festive season is crucial for e-commerce companies like Nykaa and others who typically run a series of sales before Diwali. Last year, most of the sales had begun in Q2 but the sales were delayed by a few weeks this year. “This shift has a base impact on the Q2 FY24 growth to some extent,” Nykaa had said in an exchange filing last month.
The 50-percent growth in net profit was coupled with a 22 percent increase in revenue from operations which stood at Rs 1,507 crore in the quarter, up from Rs 1,230.8 crore in the same period last year.
The company's earnings before interest, taxes, depreciation and amortisation (EBITDA) margin improved from 5 percent in Q2FY23 to 5.4 percent in Q2FY24.
Asked what helped Nykaa's Fashion business fare better than the previous quarter, Adwaita Nayar, CEO, Nykaa Fashion said the unit plugged leakages which resulted in healthier financials.
Nayar said the unit worked on reducing return to origin (RTO) and it lowered returns. "We backlisted customers who showed bad behaviour and also blocked pin codes that showed bad behavior," she added.
The Fashion arm also began levying convenience charges at the cart level to improve profitability, as reported earlier, which helped the business, Nayar said.
Marketing spends as a percentage of net sales was also down at 24.9 percent in Q2FY24 from 28.4 percent in Q2FY23, all of which together helped Nykaa Fashion inch closer to EBITDA profitability.
In the BPC category, various companies increased discounting "...due to proliferation of a number of homegrown brands as well as increasing number of international brands making India a priority market," Nykaa said.
Nykaa's total expenses stood at Rs 1,502 crore in Q2FY24, up 22 percent from Rs 1,229 crore in the same period last year.
The Mumbai-based company had recorded a net profit of Rs 5.4 crore and revenues of Rs 1,422 crore in Q1FY24.
Buoyed by a strong performance in the first half, Nykaa said, “Overall, the H1FY24 performance sets up Nykaa well for the year with (the) second half historically witnessing superior consumer demand.”
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
