Nykaa Reports Profit Jump, Acquires LBB to Sharpen Position as Discovery-Led Retailer

Indian cosmetics-to-fashion retailer Nykaa's parent company reported a 33.2 percent rise in first-quarter net profit on Friday, boosted by strong demand for its fashion products. The TGP-backed company, which dominates the domestic online beauty and personal care space with nearly 30 percent market share, has been on an acquisition spree and recently ventured into men's innerwear and athleisure category with a new brand.

Nykaa in November 2021 made a strong market debut, fetching the country's first women-led unicorn a valuation of nearly $14 billion (roughly Rs. 1,11,200 crore).

The company said its gross merchandise value (GMV) jumped 47 percent to Rs. 2,156 crore in the quarter. GMV from its fashion business jumped 59 percent, while that from the beauty and personal care business rose 39 percent.

"The consumer demand for beauty, personal care and wellness is also showing early signs of recovery and we are gearing up for a promising festive season this year," said Nykaa CEO and Managing Director Falguni Nayar.

Consolidated net profit for Nykaa-parent FSN E-Commerce Ventures Ltd stood at Rs. 4.55 crore for the quarter ended June 30, compared with Rs. 3.42 crore a year earlier.

Revenue rose 40.6 percent to Rs. 1,148 crore.

On Friday, Nykaa said that it would acquire digital content-cum-commerce firm Iluminar Media known by the brand name of Little Black Book (LBB). FSN E-commerce, did not disclose the deal value but said that the acquisition aligns with Nykaa's fundamental content-first approach to engaging with its loyal consumer base.

"We are excited about the strong synergies we share with LBB, because much like Nykaa, they have sharply focused on driving discovery and spotlighting promising home-grown brands across their channels since day one.

"We welcome their like-minded leadership into the Nykaa family and look forward to helping them scale, as together we better serve our audience base," Nykaa spokesperson Nihir Parikh said in a statement.

Co-founded by Suchita Salwan and Dhruv Mathur in 2015, LBB had a total revenue of Rs. 19.44 crore in 2021-22.

"The transaction will enable the company to strengthen its content delivery, drive discovery for brands and make shopping experience more engaging for the customers," Nykaa said in a regulatory filing.

Nykaa will acquire 100 percent stake in LBB in an all-cash deal.

"Through this partnership with Nykaa, we're excited to scale to even greater heights. Together, we want to drive value to Nykaa and LBB's shared goals to build discovery for India's emerging brands through content, community and a discovery-first approach.

"LBB's robust content creation capabilities and creator network will be leveraged within Nykaa's platforms to drive consumer engagement and retention, further scaling reach and engagement for our brand partners," Salwan said.

© Thomson Reuters 2022