Indian cosmetics retailer Nykaa's shares fall after quarterly profit slump

·2-min read

By Chandini Monnappa

BENGALURU (Reuters) -Indian cosmetics-to-fashion retailer Nykaa said it was seeing demand for make-up and office wear return to pre-pandemic levels, a day after reporting a 96% slump in quarterly profit which drove its shares down as much as 7.4% on Monday.

Sales of cosmetics, formal wear and accessories took a hit during the pandemic as people mostly stayed indoors and worked from home.

However, with the easing of coronavirus-related curbs the trend is being gradually reversed with companies rolling out return-to-office plans and events such as weddings being allowed with fewer restrictions on the number of guests.

"We are seeing consumption of lipsticks, office wear and wedding wear return to pre-COVID-19 levels ... the wedding season is just beginning and we expect the momentum to continue up to February, March 2022," Chief Executive Officer Falguni Nayar told Reuters on Monday.

FSN E-Commerce Ventures Ltd, popularly known by the brand name Nykaa, last week debuted at a 79.4% premium to its offer price.

In its first earnings report following the blockbuster market debut, Nykaa late on Sunday reported https://www.bseindia.com/xml-data/corpfiling/AttachLive/87a0a3e7-683c-49e1-ab5c-fa7fba3f33ca.pdf a consolidated net profit of 11.7 million rupees ($157,306.69) for the September quarter, compared with 274.7 million rupees a year earlier.

Nykaa's shares pared some losses to trade 3% lower at 2,287.90 rupees.

The company's marketing and advertisement expenses rose nearly four times to 1.21 billion rupees for the quarter.

Marketing expenses in 2020 were exceptionally low as the company did not spend as much on advertising during the pandemic, Nayar said.

Founded by Nayar, a former investment banker, in 2012, Nykaa's quarterly revenue from operations rose 46.6% to 8.85 billion rupees.

Gross merchandise value (GMV) at Nykaa's beauty and personal care segment was up 38%, while GMV from its fashion vertical more than tripled during the quarter.

($1 = 74.3770 Indian rupees)

(Reporting by Chandini Monnappa in Bengaluru; Editing by Shounak Dasgupta)

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