Nykaa Fashion CEO Nihir Parikh Quits

Nykaa Fashion Chief Executive Officer Nihir Parikh has resigned and has been relieved with immediate effect, a regulatory filing said on Thursday.

The top-level reshuffle comes at a time when the fashion vertical—which is still loss-making—has seen two consecutive quarters of slow growth as consumers made fewer purchases amid high inflation.

"Nihir Parikh has resigned effective December 05, 2024, on account of personal commitments. He has been relieved from the services w.e.f. (with effect from) close of business hours of December 5, 2024," the filing said.

Parent FSN E-commerce Ventures Ltd. entered into the fashion business in 2018, which currently accounts for less than 10% of the overall revenue.

Parikh joined Nykaa as chief strategy officer in May 2015 and rose through the ranks to become the CEO of Nykaa Fashion in April last year.

During the July-September period, the fashion business' gross merchandise value growth slowed to 10% from 27% a year ago and 15% in the preceding quarter, translating to just a 12% growth for the first half of the fiscal. The company, which sells clothing, footwear, and handbags, attributed the subdued growth during the second quarter to key festivals falling later in the year, as such events typically boost sales of fashion products.

Nykaa, like other companies selling discretionary products, was hit as people chose to spend on products more essential. Rival Shoppers Stop Ltd. also reported a loss for the second straight quarter in Q2, while Tata Group-owned Trent Ltd. posted its slowest revenue growth in 14 quarters.

Nykaa's other key metrics, such as orders, declined to 18 lakh units in the second quarter, marking a 4% year-on-year decrease. The annual unique transacting customers grew 7%, and the average order value grew 10% year to Rs 4,464, the reason being the cost of customer acquisition going up and conversion rates going down.

According to the company's presentation, the contribution margin for the fashion business improved 650 basis points over the previous year to 15.4%, driven by higher marketing and service-related income.

"But the long and short of it is that we couldn't deliver better growth, given the marketing budgets that we wanted to spend," Nykaa founder and CEO, Falguni Nayar, told analysts during a post-results call. "Part of it was market adversity, but also some things we may not have done as well. We are working towards reviving the growth."

On outlook, Nayar said, "October clearly was better, but we also don't want to speculate about the future." However, the industry is hoping for improved growth in the second half of the year, which coincides with the wedding season, she added.