Bengaluru: FSN E-Commerce Ltd., which operates e-tailer Nykaa, will continue making investments in its beauty and personal care (BPC) vertical to accelerate customer acquisition in the coming quarters, Anchit Nayar, chief executive officer of Nykaa’s beauty business, said on Monday.
“The investment in customer acquisition of the past few quarters has been one of the major drivers of the revenue growth, which we’ve seen in the beauty business in the Q3 numbers. So, our hypothesis seems to have been correct that there is a lot of growth yet to be had,” Nayar said during the third-quarter analyst call.
“And we continue to want that growth. So, I think we’ll continue to invest in the beauty business. It’s a business that has the profitability to support its customer growth plans,” he added.
Nykaa’s profit after tax surged 61% year-on-year to ₹26 crore in the December quarter, led by a rise in gross merchandise value in its beauty business at ₹3,389 crore. Its revenue from operations rose 27% to ₹2,267 crore, in line with estimates.
Customer growth gains
The beauty business benefited from cumulative customer growth to 32 million during the quarter, while its order volume rose 30% year-on-year, its highest in nine quarters, according to the company.
Nykaa has invested heavily in the beauty business via marketing spends till date as there is immense category expansion work to be done. “As we’ve said in the past few quarters, the beauty business has quite a healthy profitability. But because the penetration of the category in the per-capita consumption for the category is so low, there is a lot of category expansion work that needs to be done. And ultimately, the benefit of a larger TAM [total addressable market] will accrue to us because ultimately, we are the largest player in the space. So we see it as an investment for the future and investment in customer acquisition is one of the larger buckets of our marketing expense,” Nayar noted.
Nykaa Fashion saw a revenue growth of 21% y-o-y in the third quarter, in a subdued demand environment with GMV growth of 8%. LBB—Nykaa’s content platform business, saw strong growth this quarter, aided by marketing campaigns and events such as Nykaaland and Nykaa wali Shaadi, driving overall revenue growth for the fashion vertical, the Mumbai-based firm said.
Nykaa’s house of brands achieved an annualized GMV run rate of ₹2,400 crore in the December quarter, a 3x jump from 3 years ago. According to the company, it is now one of India’s largest beauty house of brands at an annualised GMV run rate of ₹1,900 crore.
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