Beauty and fashion firm FSN E-Commerce Ventures, which operates under the Nykaa brand, posted a 70.75 per cent drop in consolidated profit to Rs 8.48 crore for the third quarter ended December, mainly on account of investment in retail stores.

The company had reported a net profit of Rs 29 crore in the same period a year ago.

The revenue from operations, however, increased by about 33 per cent to Rs 1,462.82 crore from Rs 1,098.3 crore in the December 2021 quarter.

Nykaa's Executive Chairperson, managing director (MD) and chief executive officer (CEO) Falguni Nayar said the company is focussing on improving Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) margin.

"Beyond EBITDA we call it an investment that we are making for the future. One of the big costs is lease and rental. We are investing and rolling out physical stores. That is being taken by us as an operational cost. We are also looking to acquire 7 million (70 lakh) new customers. All that is being funded by operational cost," Nayar said.

The company scaled up its SuperStore to 92,415 transacting retailers across more than 650 cities with 180 brands listed as of December 31, 2022.

Nayar said the company's investments are being done in a manner that it stays profitable but it will be wrong to give up on investments for the future.

The gross merchandise value (GMV) of the company grew 37 per cent year-on-year to Rs 2,796.5 crore, the company said in a statement.

Beauty and personal care GMV grew by 26 per cent to Rs 1,901.4 crore on a year-over-year (YoY) basis, with annual unique transaction customers increasing by 27 per cent to 96 lakh.

The fashion vertical GMV rose 50 per cent to Rs 724.4 crore during the reported quarter on YoY basis, and annual unique transacting customers grew 50 per cent YoY to 24 lakh.

"The business has delivered consistently strong GMV and revenue growth at 37 per cent YoY and (revenue) 33 per cent YoY respectively. The performance has been especially good given the backdrop of eight fewer festive days in the third quarter, FY'23, compared to third quarter, FY'22," Nayar said.

She further said the fashion vertical rebounded during the quarter. Nykaa Fashion delivered a GMV and revenue growth of 50 per cent and 43 per cent, respectively.

Fashion vertical now accounts for 25.9 per cent of Nykaa's GMV.

Nayar also clarified on the bonus issue that its board approved in a ratio of five shares for every one share held.

She said around 90 per cent of shareholders had participated in the voting and 100 per cent had voted in favour of the resolution.

Nayar said the only area where the company went wrong was that the allocation was delayed by 4-5 days due to the cooling-off period required as per the rules.

"Therefore it is a myth that shareholders were not happy with the bonus issue," Nayar said.