FSN E-Commerce Ventures (Nykaa) expects its consolidated revenue for the first quarter of current financial year 2023-24 (Q1FY24) to grow in the mid-twenties on year-on-year (YoY) basis. The online retailer for clothing and cosmetics has released its June quarter revenue update for FY24 in a stock exchange filing on Friday.

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Despite overall discretionary spend slowdown, the consumption in the Beauty and Personal Care (BPC) categories continue to remain strong, in line with longer term trajectory, Nykaa said.

"Nykaa was witness to this with the success of this quarter flagship sale event ‘Pink Summer Sale’ during the quarter. Our BPC business NSV (net sales value) for the quarter is expected to grow in the early twenties YoY. This is supported by strong urban demand in the category," it said in a statement.

Nykaa said that the apparel industry has been impacted due to discretionary slowdown during the quarter, especially in small towns. The company expects discretionary spending to improve with the revival of seasonal demand.

Nykaa Fashion NSV may grow in low to mid-teens

Despite the larger category trend, Nykaa's fashion business has witnessed relative resilience through gradual improvement in order volume with sustained AOV (average order value) YoY. Nykaa Fashion NSV for the quarter is expected to grow in low to mid-teens on a YoY basis.

Further, Nykaa said that macro indicators of the Indian economy reflect a healthy trend, which augers well for the long-term health of the industry. GST collections continue to be robust, and inflation has started to moderate. Interest rates are also showing signs of stabilising, the company said.

Even as the business growth prospects for Nykaa remain strong, it has failed to reflect in the performance of the stock. On Friday, Nykaa shares were trading nearly 1 percent higher at Rs 145.15 apiece on the NSE. The stock has gained 7.77 percent in the last one month, while it tumbled 6.51 percent on a year-to-date basis.

A series of top management exits and challenges in growing the profitability have been the major triggers for the underperformance of Nykaa shares.

First Published:Jul 7, 2023 9:19 AM IST