Nykaa drops 2% post-Q1 update; heres what the company said on apparel industry, discretionary spending

Nykaa share price: Shares of FSN E-Commerce Ventures Limited, the parent company of Nykaa, ended over 2 per cent lower at Rs 140.80 on the BSE on Friday, a day after the beauty e-retailer released its business updates for the quarter ended June 30, 2023 (Q1FY24).

The company said that the apparel industry has been impacted due to a slowdown in discretionary spending during the quarter, especially in small towns.

It further said that it expects discretionary spending to improve with the revival of seasonal demand. Despite the larger category trend, it said its Fashion business witnessed relative resilience through gradual improvement in order volume with sustained Average Order Value (AOV) on a year-on-year (YoY) basis. 

Nykaa Fashion's net sales value (NSV) for the quarter is expected to grow in the low to mid-teens on a YoY basis, it said.

Nykaa added that despite the overall discretionary spending slowdown, consumption in the beauty and Personal Care (BPC) categories continues to remain strong, in line with the longer-term trajectory. Nykaa was witness to this with the success of this quarter's flagship sale event, ‘The Pink Summer Sale', during the quarter.

"Our BPC business NSV for the quarter is expected to grow in the early twenties YoY. This is supported by strong urban demand in the category," it added.

Nykaa on Indian Economy

The company in its update noted that the 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. 

About Nykaa

Nykaa (FSN E-Commerce) was founded in 2012 by entrepreneur Falguni Nayar. Derived from the Sanskrit word ‘Nayaka’, meaning one in the spotlight, Nykaa has emerged as one of India’s leading lifestyle-focused consumer technologies platforms. Delivering a comprehensive Omnichannel e-commerce experience, Nykaa offers over 4,500+ brands through its website and mobile
applications.

Nykaa share price

FSN E-Commerce Ventures (Nykaa) shares were listed on November 10, 2021. It made a strong debut at the bourses; however, it quickly lost steam as tech stocks around the world continued to get hammered. Over the past 12 months (from July 7, 2022, to July 6, 2022 closing), the stock has rallied 40.5 per cent, Trendlyne data show. However, the stock is still far below its issue price of Rs 1,125.