Beauty and fashion e-commerce giant Nykaa is preparing for its next phase of growth by focusing on margin expansion and a strategic revamp of its fashion segment. The company, which has already established dominance in India’s online beauty space, is now shifting gears to balance profitability with broader market capture, especially in its underperforming fashion vertical.
FSN E-Commerce Ventures, the parent company of Nykaa, has seen fluctuating performance in recent quarters. While its core beauty and personal care (BPC) division continues to post strong results, the fashion arm has struggled with sluggish growth and mounting competition from platforms like Myntra, Ajio, and Tata CLiQ. In a recent earnings call, Nykaa’s leadership outlined a roadmap that includes sharper inventory management, premium positioning, and deeper private label integration to drive both margins and customer stickiness.
One of the key pillars of this strategy is the improvement in operating margins. By enhancing its tech infrastructure and optimizing marketing expenses, Nykaa aims to boost EBITDA margins in the coming quarters. The company is also doubling down on private labels, which offer higher profitability compared to third-party brands. This margin-first approach marks a shift from the earlier growth-at-any-cost strategy that dominated India’s startup ecosystem over the past decade.
In the fashion category, Nykaa is implementing a two-pronged approach: first, elevating the brand curation on its platform to appeal to a premium audience, and second, launching exclusive collaborations and celebrity-backed lines to increase brand loyalty and differentiation. The management emphasized that fashion, though currently contributing less to the overall revenue, holds long-term potential due to its large addressable market and consumer stickiness.
Another noteworthy move includes Nykaa’s focus on omnichannel expansion. The company is strategically increasing its offline presence through Nykaa Luxe and Nykaa On Trend stores in urban centers. These brick-and-mortar outlets are being used as experiential hubs to strengthen brand recall and drive cross-channel sales.
Market analysts have taken note of Nykaa’s shift in priorities. “A focus on sustainable growth and profitability, especially after recent market corrections in the tech space, is the right move,” said an equity analyst at a leading brokerage. Nykaa’s stock, which witnessed significant volatility post its IPO, has shown signs of stabilization following the company’s renewed growth narrative.
