Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- FSN E-Commerce Ventures Ltd (BOM:543384, Financial) reported a strong GMV growth of 24% year on year, with revenue from operations reaching INR1,875 crores.
- The company achieved a gross profit margin of 43.8%, marking a 70 basis point improvement year on year.
- EBITDA grew by 29% year on year, exceeding INR100 crores for the quarter.
- The beauty segment experienced a robust 29% year on year growth in GMV, driven by new customer acquisition and expansion in the premium fragrance market.
- FSN E-Commerce Ventures Ltd expanded its physical retail footprint to 210 stores across 70-plus cities, making it the largest beauty specialty retailer offline in India.
Negative Points
- The fashion segment showed slower growth, with only a 10% year on year increase in GMV, attributed to subdued demand in the first half of the year.
- There is ongoing pressure from elevated retailer-funded discounting in the beauty category, particularly from horizontal platforms.
- The cost of customer acquisition has increased, impacting marketing expenses.
- Despite improvements, the eB2B business remains EBITDA negative, affecting overall profitability.
- The company faces challenges in reviving growth in visits and conversions in the fashion segment, partly due to increased customer acquisition costs.
Q & A Highlights
Q: Can you update us on the beauty discounting pressures and whether they have moderated from levels seen in the last quarter?
A: Anchit Nayar, Executive Director & CEO, Nykaa Beauty, mentioned that discounting has slightly moderated but remains elevated, especially from horizontal platforms. Brands are against retailer-funded discounting as it commoditizes the category, and there is optimism that it will continue to moderate.
Q: How is the growth environment in the fashion industry as we enter the festive season in Q3?
A: Nihir Parikh, CEO, Nykafashion.com, noted that the first half of the year was slower, but there is continued customer interest. Falguni Nayar, Executive Chairperson & CEO, added that the industry is hoping for better growth outcomes in the second half due to the wedding season.
Q: Why is there a stark difference between beauty and fashion in terms of visits and MAUV?
A: Falguni Nayar explained that the cost of customer acquisition went up due to poorer conversions, and they chose not to chase growth by spending more on marketing. They are working towards reviving growth and visits, with October showing improvement.
Q: Why is Nykaa focusing on quick delivery initiatives?
A: Anchit Nayar clarified that while Nykaa is not aiming for 30-minute delivery for all products, they are focusing on fast-moving everyday SKUs. The initiative is not expected to be margin dilutive or require large capital investment, and it aims to enhance consumer experience.
Q: How does Nykaaland impact the P&L, and are there plans to monetize it?
A: Falguni Nayar stated that most costs are recovered from brand partners and sponsors, adding to marketing income. Anchit Nayar added that the event is a unique consumer proposition, and there are plans to commercialize it further, including retail sales at the event.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
