India’s Nykaa posts near-50% rise in Q4 pre-tax profit on higher margins

(Corrects metrics in paragraph 2 to “profit before tax” and in paragraph 3 to “profit attributable to shareholders”; corrects paragraphs 4 and 6 to say orders were for BPC unit)

BENGALURU (Reuters) – India’s FSN E-Commerce Ventures Ltd, parent of cosmetics-to-fashion retailer Nykaa, reported an almost 50% rise in fourth-quarter profit before tax on Wednesday, helped by a sales campaign that convinced customers to buy despite inflationary pressures.

Nykaa’s consolidated profit before tax rose to 86.29 million rupees from 58.16 million rupees a year ago.

The company’s profit attributable to shareholders, however, fell 71.8%, as it had reported a tax benefit of 17.6 million rupees in the March quarter of fiscal 2022.

Its earnings before interest, taxes, depreciation and amortization (EBITA) margin rose to 5.4% from 4% a year ago. Average order value of its main beauty and personal care (BPC) segment rose 5% to 1,803 rupees.

The lipstick effect – where customers are willing to buy less expensive goods during an economic downturn – was on full display this quarter, with Nykaa’s ‘Pink Love’ sales campaign playing a crucial role in mustering up sales.

BPC orders rose 22% in the quarter, with merchandise value (GMV) – the monetary value of orders across its platforms – rising 36% to 24.45 billion rupees.

The GMV from the BPC business, which accounts for roughly 67% of total GMV, rose 29%.

Nykaa’s shares closed down 2.7% ahead of the results. The stock fell around 19% in the January-March quarter.

(This story has been corrected to fix metrics as “profit before tax” in paragraph 2 and as “profit attributable to shareholders” in paragraph 3, and to say orders were for BPC unit in paragraphs 4 and 6)

(Reporting by Navamya Ganesh Acharya in Bengaluru; Editing by Janane Venkatraman)