Nykaa Fashion, a subsidiary of FSN E-Commerce Ventures, made a significant announcement on Thursday regarding the resignation of its CEO, Nihir Parikh. According to the company's regulatory filing with both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), Parikh's resignation is effective from the close of business hours on December 5, 2024. The company expressed its gratitude for Parikh’s dedicated leadership and his substantial contributions during his tenure.
In its statement, Nykaa acknowledged Parikh’s invaluable role in the company's development, thanking him for his long-standing association with the company. Nykaa emphasized the positive impact he had on the brand, even though Nykaa Fashion, under his leadership, still represents less than 10% of FSN E-Commerce Ventures’ overall revenue. The beauty segment, which remains the largest and most profitable vertical for the parent company, continues to dominate Nykaa's business portfolio, while the fashion division is still in its growth phase and remains loss-making.
Although Parikh’s departure is a significant change, it follows a period of strong performance for FSN E-Commerce Ventures, which posted impressive results for the July-September quarter (Q2 FY25). The company reported a notable 71.6% year-over-year increase in consolidated net profit, rising from Rs 5.85 crore in Q2 FY24 to Rs 10.04 crore in Q2 FY25. This performance marks a solid recovery for the company, which also saw a sequential net profit increase of 4.1%, compared to Rs 9.64 crore in Q1 FY25. The company’s growth was driven in large part by its thriving beauty segment, with the premium fragrance category emerging as one of the standout performers in Q2 FY25, even outpacing the overall growth of Nykaa's platform.
Despite the success in the beauty segment, Nykaa Fashion continues to face challenges in scaling and profitability. This loss-making vertical has yet to achieve the same level of success as its beauty counterpart, which remains a concern for the company’s long-term growth strategy. Nevertheless, the company remains optimistic about Nykaa Fashion’s future and continues to invest in its development.
As for the leadership transition, FSN E-Commerce Ventures has yet to announce a successor for Parikh, leaving many questions about the future direction of Nykaa Fashion unanswered. The uncertainty surrounding the succession plan comes at a time when Nykaa is in the midst of significant growth in its other verticals. Despite the resignation, the company is poised to continue capitalizing on the momentum generated by the beauty segment, particularly the growth of premium fragrance offerings, which helped drive the positive results in Q2 FY25.
On the stock market front, Nykaa's shares experienced a minor dip, closing at Rs 167.80 on Thursday, down by 0.77%. This decline came after the resignation announcement but is not likely to significantly impact the company's long-term outlook, given its strong performance and ongoing strategic focus on its profitable beauty segment.
In conclusion, while the resignation of CEO Nihir Parikh marks a notable leadership change at Nykaa Fashion, the company's recent growth and strong performance in the beauty segment suggest that it is well-positioned to navigate this transition. The coming months will reveal how Nykaa Fashion adapts to this shift in leadership and continues to evolve in the highly competitive e-commerce and fashion industries.
