Nykaa, a large online retailer, wants to strengthen its omnichannel presence. Nykaa intends to establish 50 more offline locations this year despite having to bear increased costs as a result of new store openings, which hurt the business’s bottom line in December 2023.
With 45 new stores set to open in 2022, Nykaa will have 141 total locations. The Nykaa leadership stated in its post-earnings call late on February 13, 2023, that “that momentum will continue.”
The Executive Chairperson, MD, and CEO of Nykaa, Falguni Nayar, revealed to a select group of media, “We will roll out 50 outlets over the next four quarters. There is room for growth in general trade and modern trade even though physical retail only makes up less than 10% of our income. Beautiful things are often sought after.
In malls across India, it is one of the top three categories, along with footwear and sporting goods. In spite of operating sales increasing by more than 33% to ₹1,462 crore, Nykaa reported a 71% decline in its consolidated net profits to ₹8.5 crores in the third quarter of FY23.
The company’s quarterly net earnings were significantly reduced by higher costs related to retail expansion and the establishment of fulfillment centers. The retail presence of Nykaa was 1.4 lakh square feet across 56 cities at the end of Q3 FY23. Additionally, the business runs 40 fulfillment centers totaling 1.3 million square feet across 18 cities. “In 2022, our fulfillment centers expanded greatly. Now we are expanding regional warehouses into state capitals. As a result, Nayar stated, delivery times will be shortened and we will be nearer to our clients.
The year 2022 has been viewed as one of investment, she continued. Our lease expenditures are split equally between office space and our office space, warehouses, and retail outlets, totaling 50%. These, however, are long-term investments.
In this approach, we have faith. Technology startups, in Nayar’s opinion, may be doing it wrong if they sacrifice long-term growth for immediate financial gain. “To abandon long-term growth would be a mistake. The former investment banker said that managers who sacrifice long-term growth for immediate financial gain would cause the organization greater harm.
She continued, “We are growing our company with the long term in mind, and we are continuing to stay in a positive zone. We are not entering a losing situation. Nykaa reported that its sales growth was solid in both January and February.
With decreasing inflationary pressures and customers spending more on discretionary items, the company is on track to add over 7 million new customers in the beauty and fashion sectors in FY23. Presently, 14% of Nykaa’s net revenues and 30% of its GMV come from the fashion industry. It is now a sizable business, said Nayar. Tuesday’s BSE opening price for Nykaa shares was down 5.39 percent at ₹149.10.
