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Falguni Nayar, Retail News, ET Retail

Nykaa share price is up from IPO price even now: Falguni NayarNykaa share price is up from IPO price even today. It is the listing pop from where some amount of share price decline has happened but Nykaa continues to be in positive territory even from an IPO price,” says Falguni Nayar, Founder & CEO, Nykaa.

On Nykaa’s results and impact on future
From Nykaa’s perspective, we have had almost 6 million new customers acquisition this year and this is around 4.4 million new customers acquired in beauty and about 1.6 million in fashion. That has been a big investment that we are making for the future and that also reflects a slight erosion in EBITDA.

The EBITDA is lower by 200 bps and part of it is towards this increased marketing that we undertook during the year. On the fulfilment side, our costs are slightly adverse but there we saw some adverse costs due to fuel prices going up.

As you are aware, supply chain logistics were a problem and we have gone and invested in regional warehouses. About three-four are coming up now and there are more that will come and through this regional warehouse structure because Nykaa has got scale over last two-three years.

Nykaa has been growing and that scale allows us now to be closer to our customers in regional warehouses from where we achieve three things. We achieved faster delivery of packages to our customers. They do not need to be sent by air shipment and that lowers the cost and thirdly, of course, we have greater availability regionally and that also allows us to stock up even heavy products closer to the customers.

So in many ways, we have the ability to be in regional warehouses. This is going to allow us to have a greater emphasis even on our BPC business, what we call personal care business.

Just a quick word on the stock price. You have been an investment banker where I am sure you also were convinced at one point that valuations are a slave of earnings. But we have seen Nykaa’s net losses widening in the quarterly results since the IPO. The share price is also down. What do you have to say to them and when do you see all of this turning around?
I want to remind you that Nykaa share price is up from IPO price even today. It is the listing pop from where some amount of share price decline has happened but Nykaa continues to be in positive territory even from an IPO price.

As far as investment for the future is concerned, I am a big believer that every company must invest for the future and coming out of Covid, it is the time to push the pedal on investments. So be it our warehouses, be it our stores, we are rolling out more stores than we did during the previous year as well as new customer acquisition that I just spelt out.

So to compare with the Covid year is a little bit difficult because in the Covid year, for the first one or two quarters, we really had a lot of adversity where we could only do essentials business and that made us not want to invest.

In the previous year, comparisons were all made on six months results of some normalisation and this year we have clearly pushed the pedal on growth in all directions – be it customer acquisition, stores as well as warehouse roll out. We continue to grow new businesses like fashion. Now fashion accounts for more than 25% of our GMV, nearing 30%.

So fashion is a significant part of our business, now doing well. We have been improving our unit economics and we continue to want to do that. In fact this year, we have given a lot of data to our investors because earlier our data used to be a mix between beauty and fashion numbers, now we have spelt out beauty and fashion numbers separately so that investors can see how each of the business unit economics is panning out.

We have given information about the new business like eB2B business that we are investing in as well as Nykaa Man. Nykaa has been very transparent and I believe that companies have to invest in future growth and the company will come out stronger in the long run with this. I do not think there is any weakness. I want investors to understand the investments we are making for the future.

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