Nykaa has big plans for house of brands business
Beauty and personal care retailer Nykaa expects its house of brands business to grow significantly and drive profitability over the next three years, co-founder Adwaita Nayar said.
The company is betting on its bouquet of home brands in the cosmetics, personal care and apparel segments to lead the charge. Together, Nykaa's house of brands business across fashion and cosmetics has hit a gross merchandise value (GMV) run rate of ₹2,100 crore, Nayar said in an interview.
'It has more than doubled in size in two years," said Nayar, an executive director on the listed company's board and chief executive officer (CEO) of Nykaa Fashion.
Also read | Nykaa to expand rapid delivery service to more metros as quick commerce takes off
FSN E-Commerce Ventures Ltd, which operates as Nykaa, has acquired three brands—Dot & Key, Earth Rhythm and GICA brands—and built nine others in-house.
'We've been slowly trying to fill the white spaces. We got brands in make-up—like Nykaa Cosmetics and Kay Beauty. We got brands in skincare like Earth Rhythm. We've slowly started building Wanderlust, which is our bath and body brand. We've just started building our perfume business. We have Indian wear, western wear, lingerie and sportswear," Nayar said.
Nykaa has been building its brand capabilities over the last few years by hiring key talent, setting up processes and capabilities, working on the product research and development and distribution, Nayar said. Founded by her mother Falguni Nayar in 2012, Nykaa began as an e-commerce platform to curate beauty and wellness products, eventually expanding into fashion and offline retail to become a prominent omnichannel beauty and lifestyle destination.
Also read | Nykaa to continue investing in beauty business to drive customer acquisition
Dot & Key, which Nykaa acquired when it had annual sales of ₹40 crore, has grown 14-fold over the last four years. It expects some of its own brands like Nykaa Cosmetics, Kay Beauty, Nykd and Twenty Dresses to lead the charge. Nykaa Cosmetics is a ₹350 crore gross margin merchandise business.
'Slowly, steadily, we want to build great customer brands in each of these," she said.
Apart from selling online through its website and app, Nykaa has a network of around 237 stories across 70 cities. For fashion, the company currently relies solely on its online channels and does not have an offline presence, Nayar said. Nykaa's offline business continues to be profitable, driving its overall growth.
Long-term bet
Another new line of business that the group is expecting to boom over the long term is its Superstore business, where Nykaa acts as a distributor for its own as well as other brands. Currently, the firm has a network of around 270,000 retailers across 1,000 cities.
Also read | Can Nykaa's house-of-brands strategy be its next growth driver?
'If the overall beauty business is around $21 billion in India, around $17 billion is offline, of which around $12 billion is unorganized. There is huge potential to grow this B2B (business-to-business) part," Nayar added.
On 30 May, FSN E-Commerce Ventures reported a 193% jump in its consolidated net profit to ₹20 crore in the March quarter. The company earned a consolidated net profit of ₹7 crore in the same period a year earlier. Consolidated revenue grew 24% to ₹2,062 crore in Q4, against ₹1,668 crore a year before.
The firm reported consolidated beauty operations sales of ₹1,895 crore in Q4, up from ₹1,520 crore a year earlier. Consolidated revenue from the fashion vertical grew to ₹161 crore in the March quarter from ₹145 crore a year ago.
On Friday, the company's share price closed ₹196.63 a share on the National Stock Exchange, while the benchmark Nifty closed 1.02% up at 25003.05. Nykaa's market capitalization stood at ₹56,214.45 crore.
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