Nykaa Q3 Update: Net revenue may grow over 20% but online fashion demand remains subdued

FSN E-Commerce Ventures Ltd., parent company of online and physical fashion retailer Nykaa, reported its December quarter business update late on Sunday evening, where it expects its net revenue to grow higher than the “mid-twenties”, even as online fashion demand continues to remain subdued.

The company said that despite the subdued demand, it remains confident of its long-term opportunity.

Nykaa’s revenue growth projection is higher than the consolidated Gross Merchandise Value (GMV) growth during this period, indicating a positive trend in the GMV to net revenue transition, it said in an exchange filing.

The beauty vertical of Nykaa has seen growth accelerate compared to the previous quarters and its net revenue growth is also likely to be higher than the “mid-twenties”. Its GMV growth is likely to be in the “low thirties”, indicating strong momentum in all of Nykaa’s beauty businesses – e-commerce platform, retail stores, owned brands and eB2B distribution.

Nykaa’s eB2B distribution business, “Superstore by Nykaa”, now accounts for 8% of the beauty businesses’ GMV, compared to 7% a year earlier and now services around 2.6 lakh transacting retailers across 1,100-plus cities.

The company’s Fashion division is likely to deliver net revenue growth of around 20%, while the Net Sales Value (NSV) growth may be in the low-to-mid-teens, indicating continuing strong growth in content, marketing and service-related income.

Shares of Nykaa ended 1.8% higher on Friday at ₹168.25. The stock has been an underperformer over the past month, having seen losses of 5%.