Indian e-tailer Nykaa misses Q1 profit estimate as apparel sales slow sharply

Fsn E-Commerce Ventures

13/08/2024 13:09

BENGALURU, Aug 13 (Reuters) - Indian retailer Nykaa
reported a much smaller-than-expected quarterly profit on
Tuesday, hurt by slowing growth in its mainstay beauty products
and especially in apparel sales.
    The company, listed as FSN E-Commerce Ventures  FSNE.NS ,
said its consolidated net profit nearly tripled to 96.4 million
rupees ($1.2 million) in the first quarter.
    However, that was much smaller than analysts' average
estimate of 226.8 million rupees, as per LSEG data.
    Nykaa, like other companies selling discretionary products,
was hit as people chose to spend on products more essential for
the intense summer and as the general elections, which spanned
half the April-June quarter, and heatwaves led to fewer store
visits.
    However, strong online sales of beauty and personal care
(BPC) products helped Nykaa overcome the hit to its retail
stores.
    Overall revenue in the BPC segment increased 23% in the
quarter, slightly slower than the 24% rise in the previous
quarter. The business, which houses Nykaa's own brands as well
as the likes of Estee Lauder, Dior, and Givenchy accounted for
91% of the company's total revenue.
    However, besides the drop in store visits, Nykaa's fashion
business was also hit by fewer wedding dates this quarter,
something that has also weighed on the likes of jeweller Titan
 TITN.NS  and shoe seller Metro Brands  METB.NS . Nykaa also
faces stiff competition from a host of other retailers.
    Revenue in Nykaa's fashion business, which sells clothing,
footwear and handbags and houses brands including Cider, Steve
Madden and Superdown, increased 21%, down from 27% in the
previous quarter.
    The fashion business' gross merchandise value (GMV), or the
monetary value of all orders, growth slowed to 15% from 27%,
much sharper than the drop in the BPC unit, where growth slowed
to 28% from 30%.
    The BPC unit's GMV also beat HDFC Securities' estimates of a
21% rise, but the fashion unit missed an 18% growth estimate.
    As a result, while Nykaa's total revenue rose 23% to 17.46
billion rupees, it missed analysts' average estimate of 17.58
billion rupees.
 
 ($1 = 83.9380 Indian rupees)

 (Reporting by Ashna Teresa Britto in Bengaluru; Editing by
Savio D'Souza)
 ((AshnaTeresa.Britto@thomsonreuters.com;))