Analyst Concall
Despite headwinds, FSN E-Comm bets on fashion segment
This story was originally published at 22:23 IST on 10 February 2025
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--FSN E-Comm: Oct-Dec beauty segment revenue up 27% YoY
--CONTEXT: Comments by FSN E-Comm's management in post-earnings analyst call
--FSN E-Comm: Oct-Dec fashion segment revenue up 21% YoY
--FSN E-Comm: Oct-Dec consol EBITDA INR 1.41 billion, up 42% YoY
--FSN E-Comm: Oct-Dec beauty segment growth accelerated, fashion resilient
--FSN E-Comm: Oct-Dec was tough quarter for online fashion pdt sales
--FSN E-Comm: Oct-Dec fashion segment marketing costs up 591 bps
--FSN E-Comm: Oct-Dec fashion segment marketing cost up on campaigns, events
--FSN E-Comm: Oct-Dec fashion segment marketing cost up on acquiring clients
--FSN E-Comm: Spent more on marketing Oct-Dec for we believe in our pdts
--FSN E-Comm: Fashion industry not at its strongest in 2024
--FSN E-Comm: Working very hard to improve assortment in fashion segment
--FSN E-Comm: Beauty brands discounts in industry going up last 5-6 qtrs
--FSN E-Comm: Beauty merchandise value up more than sales value on discounts
By Gopika Balasubramanium
MUMBAI – FSN E-Commerce Ltd., which runs the go-to beauty and fashion online platform 'Nykaa', believes fashion as a segment is 'very wide' and wants to maintain its dominance going forward. The company spent relentlessly on marketing campaigns in the Oct-Dec quarter in a bid to build the business, its management said in a post-earnings conference call.
The December quarter was a tough one "for online fashion as a space, (and) fashion in the scheme of things for Nykaa is still a young business," the management said. The company launched the fashion business six years ago.
The marketing expenses for the company's fashion business skyrocketed this quarter. The expenses went up by 591 basis points on year to 31% of net sales value in the December quarter. This was mainly on account of campaigns or events and customer acquisition, the management said. The marketing spending was accelerated in the December quarter as the company "believes" in its brand offerings and that it was worth spending additional money on marketing to drive sales growth. "We believe in our domination of the (brand) categories and want to continue to maintain that," the management said.
The revenue from the fashion segment rose 21% on year to INR 2 billion in the December quarter. The segment's gross merchandise value rose 8% to INR 11.30 billion for the quarter. The gross merchandise value of the company's in-house brands marketed under 'House of Nykaa' grew only 2% on year to INR 1.20 billion.
During the quarter, the company launched brands such as 'Snitch' and 'Victoria's Secret' on its online platform for the domestic market. The company said sales of the fashion segment were driven by strong traction on LBB through events such as 'NykaaLand' and 'Nykaa Wali Shaadi', as well as higher services-related income, the management said. The retailer has so far launched 217 fashion brands as on Dec. 31, the management said.
The company said the fashion industry has not been the strongest in 2024. The company has been working hard to bring its brands under the Nykaa's fashion platform and making it reach to the customers. "...you will see us being a lot more focused on our assortment going forward," the company said. Their in-house brands include 'Nykd', 'KICA', 'Twenty Dresses', RSVP, and 'gajra gang'.
FSN E-Commerce's beauty segment saw an on-year growth of 27% in revenue to INR 20.60 billion. Its gross merchandise value rose 32% on year to INR 33.90 billion. This segment posted strong growth across "e-commerce, physical stores, owned brands, and online business-to-business," the company said. It added 12 new stores in the December quarter taking the total count to 221 stores. When asked why the growth in net sales value underperformed gross merchandise value in the beauty segment, the company said its mainly because of discounts. The company said the discounts in the industry had been going up over the last five to six quarters because of competitiveness amongst all the brands and as international brands are coming into the country.
The company reported its earnings for the December quarter after market hours on Monday. For the December quarter, FSN E-Commerce reported a consolidated net profit of INR 261.20 million on consolidated revenues of INR 22.67 billion. The earnings before interest, tax, depreciation, and amortisation for the quarter was INR 1.41 billion, up 42% on year. Shares of the company closed 2.3% lower at INR 169.44 on the National Stock Exchange. End
Edited by Saji George Titus and Ashish Shirke
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