Slow apparel sales result in declined net profit for Nykaa in Q1, FY25
14 August 2024, Mumbai
Driven by a slowdown in its apparel sales growth, Indian retailer Nykaa reported a significantly lower-than-expected profit in Q1, FY25.
Listed as FSN E-Commerce Ventures (FSNE.NS), the e-commerce company’s consolidated net profit nearly tripled to Rs96.4 million ($1.2 million) during the quarter. However, this figure fell well short of analysts' average estimate of Rs226.8 million, according to LSEG data.
Like many other companies selling discretionary products, Nykaa faced challenges as consumers prioritised spending on essential items during the intense summer. The general elections, which occupied half of the April-June quarter, along with heatwaves, also contributed to a decline in store visits.
Revenue in Nykaa's fashion segment, which includes clothing, footwear, and handbags from brands like Cider, Steve Madden, and Superdown, declined to 21 per cent from 27 per cent in the previous quarter. Growth in the fashion business' gross merchandise value (GMV), which represents the total monetary value of orders, slowed to 15 per cent.
As a result, while Nykaa's total revenue increased by only 23 per cent to Rs17.46 billion. It fell short of analysts' average estimate of Rs17.58 billion.
