Falling Shares, Don’t Care: Nykaa Glams Up Its Distribution Game

Photo by engin akyurt on Unsplash

Personal and beauty products omnichannel player FSN E-Commerce Ventures, which operates the Nykaa brand, has reported its profits slipping by 57% for Q4 2022. On the brighter side, the beauty giant aims to double down on omnichannel and new verticals.

Only Bears For The Shares

Admittedly, since its bumper debut on D-Street in November 2021, the beauty giant’s shares have shed about 32% since listing. 

Two things weighing the stock down are – the burden of past expectations and fear of rising competition that may reduce the profit margin. 

Roarin’ Revenue

Despite the sharp fall in the bottom line, the revenue and the Gross Merchandise Value (GMV) rose sharply in comparison to the past year’s performance.

Nykaa’s revenue increased by Rs.1,300 Cr in the fiscal year 2022. As for the GMV, the beauty and personal care vertical grew by 29% to Rs 1,248.5 Cr – an incredible markup from Rs. 964.5 Cr from the past year.

Of course, Nykaa’s fashion vertical hasn’t been doing bad at all. It recorded 84% growth and clocked Rs. 482.7 Cr. This vertical has achieved an incredible growth of over 2.5X since last year!

Ain’t No Backing Down

Next up, the beauty retailer’s focus will be to strengthen its new business verticals – Nykaa SuperStore and NykaaMan

Besides, the major chunk of money has gone into investments such as the company’s 51% acquisition of stakes in Dot & Key recently. It also acquired clean beauty brand Earth Rhythm, dietary supplements company Nudge Wellness, and athleisure brand KICA last month.

Word For The Investor 

Brokerage firm ICICI Securities anticipates much higher competition for Nykaa in the time to come. It recommends investors hold on to the stock – no buying or selling for now.

Too long? Here’s a one-liner: After halving profits, Nykaa aims to double down on omnichannel and new verticals despite facing competitive heat.

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