FSN E-Commerce Ventures, which operates omnichannel beauty and fashion retailer Nykaa, has reported a 71% decline in consolidated net profit to Rs 8.48 crore for the quarter ended December 31. It was Rs 29.01 crore in the same period last year.

Revenue from operations grew 33% year on year to Rs 1,462 crore from Rs 1,098 crore.

“The business has delivered consistent strong gross merchandise value (GMV) and revenue growth at 37% YoY and 33% YoY respectively. The performance has been especially good given the backdrop of eight fewer festive days in Q3 FY23 (October-December 2022), compared to Q3 FY22 (October-December 2021),” said Falguni Nayar, executive chairperson, MD and CEO, Nykaa.

Nykaa Fashion has delivered a GMV and revenue growth of 50% YoY and 43% YoY, respectively. Fashion now contributes to 25.9% of GMV. Other businesses led by its e-B2B initiative SuperStore now contribute 6.1% of the GMV from 2.4% in the third quarter of the previous fiscal year, she added.

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

Last week, ecommerce focused logistics company Delhivery’s chief executive Sahil Barua also said the broad arc of ecommerce remained positive in India and that he expected about 15-20% growth in ecommerce shipments in the country this year. Nykaa’s expenses surged 36% to Rs 1,455 crore during the quarter against Rs 1,067 crore in the year-ago period, mainly because of an increase in spending on lease rentals, which was incurred on account of physical store expansion. As of December 31, the company had 141 physical stores.

Nayar indicated to analysts in a post-earnings call that some growth would be trimmed off the top because of a slowdown in discretionary spending.

“I think the fact that the third quarter had about eight fewer days of (Nykaa’s flagship Pink Friday) sale, and the sale was in the second quarter compared to the third quarter in the previous year – that would take away around 3% or so in terms of the growth,” she said.

“In addition to that, we do believe that in terms of the third quarter of this financial year, it was quite strong, but the margin might be slightly impacted in terms of consumption because of what’s going on with discretionary spends. But we’ve acquired customers nicely, and I wouldn’t call it a difficult quarter at all. In such a difficult environment, it does shave away a little bit from the top. There could be downtrading from certain brands to cheaper brands but nothing in a very meaningful way that would be of concern,” Nayar said.

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