Nykaa Fashion aims to achieve positive EBITDA in FY2026, Retail News, ET Retail

New Delhi: The fashion arm of e-commerce major Nykaa aims to become EBITDA positive in fiscal 2026 with almost three-fold growth in the next three years, the company said in a statement on Friday.

“Nykaa Fashion has demonstrated spectacular growth, boasting a GMV of over $400 million in FY24. During the year, the company increased its EBITDA margin by over 600 basis points. Based on this success, Nykaa Fashion intends to expand to 2.5-3 times per year in the next 3 years and aspires to achieve positive EBITDA in the near future,” the company said in a statement.

Nykaa Fashion has a 20 percent share of the premium online women’s market, according to the company’s annual report. The company said it saw a 44 percent increase in orders compared to FY21, to 7 million in FY24.

Commenting on its beauty retail business, Nykaa said the retailer expects a mid-to-late 2020 CAGR by FY28.

“The results of our recent investments in Fashion and eB2B are reflected in the past year in the form of significantly increased profitability in both businesses. “Both companies are expected to continue to rapidly expand margins over the next two to three years, which will lead to improved Nykaa consolidated margins,” said Falguni Nayar, Executive Chairman, Founder and CEO of Nykaa.

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With a 30% online market share, Nykaa aims to double its store count by FY27. It currently operates 187 stores across 68 cities.

In its beauty business, Nykaa has a margin of 25.5% and intends to keep the margin flat in FY24 by reinvesting potential efficiencies in growth, the company said.

Nykaa generates 84% ​​of its net sales from the beauty industry, followed by fashion. Over the next 5 years, the company expects fashion’s share to increase to 21%.

With a focus on reducing operating costs, the annual report showed that the company’s order fulfillment expenses in FY24 dropped to 9.5% of total revenue compared to 10.9% in FY23 and 12.7% in FY20 22.

Nykaa has 44 warehouses in 16 cities. It said the company had achieved improved lead times in the cosmetics industry and significant improvements in leakage, reducing reverse logistics costs. Additionally, the e-commerce company said it is working with brands to increase order fulfillment efficiency.

Total marketing costs remained unchanged at 11.5% of revenue in the last fiscal year, with a slight decline in both beauty and fashion divisions.

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