Face wash to oral care: Mamaearth parent’s new growth path post profit surge
Bengaluru: Honasa Consumer Limited, parent company of Mamaearth, The Derma Co and Aqualogica, plans to deepen focus on new categories like oral care and premium skin care after reporting profit after tax ₹39 crore compared to loss in September quarter ₹18.5 crore a year ago, founder and chief executive officer Varun Alagh said on Wednesday.
Beauty and personal care company acquires minority stake ₹Oral care brand Fang Oral (operated by Couch Commerce Pvt Ltd) will expand its presence in the category with teeth whitening and electric toothbrush products, a filing to the stock exchanges said. The move aims to meet the growing demand for premium offerings.
“We see the rise of oral beauty already happening and may start to take shape in India over the next decade. There is a lot of premium potential in this category. In the beauty and personal care space, this could be a $700 million opportunity,” Alagh told analysts in the September quarter earnings call.
The company’s operating income increased in the September quarter ₹538 crore, an increase of about 17% compared to the same period last year. While net profit increased on an annual basis, it decreased sequentially ₹41 crore due to increased expenses in the June quarter.
The firm also reported a revenue recognition change on Wednesday triggered by a change in the seller billing structure of Flipkart Group, which operates the e-commerce marketplace. Flipkart now deducts logistics and fulfillment expenses from revenue instead of mentioning them in a separate sub-head, resulting in lower revenue in sellers’ books. However, Alagh said the change did not have a significant impact on Honasa’s profitability.
Honasa’s steady quarterly performance serves as a breather for the direct-to-consumer brand; as the brand avoids the cost impact of shifting offline distribution and a larger slowdown in production. beauty and personal care consumption in the country.
The company’s shares closed 3.31% higher on the NSE on Wednesday. ₹283.95 each. The results were announced after Sunday time.
Neev Project is taking shape
In the third quarter of FY24, Honasa moved to a direct distribution model called Project Neev in the top 100 cities, phasing out its dependence on super stockists to improve efficiency and quality. Although the transition was intended to support long-term margins and streamline operations, it hurt the firm’s revenue in subsequent quarters.
But according to Alagh, the transition is almost complete, with more than 80% of the company’s distribution handled directly by its distributor network.
“This time last year the contribution of super stockists accounted for two-thirds of our offline distribution. However, last quarter over 80% of our distribution came directly from distributors. The change was difficult but necessary and underpins the future growth of our various brands,” Alagh said.
Basic categories
Honasa’s core categories (including face washes, sunscreen, moisturizer and shampoo) now account for 75% of its total revenues; This rate is higher than 70% last year. Revenue for its four youth brands – Bblunt, Aqualogica, Dr Sheth’s and Staze – rose 20% year-on-year in the September quarter.
It will now sharpen its focus on premium and prestige categories in skin care to increase market share and brand loyalty. “We will continue to focus on core categories to find ways to grow revenue and grow market share using innovation,” Alagh said.
Last week the company organized a prestige night skin care Luminéve brand partners with beauty retailer NykaaIt focuses on active ingredients such as collagen, peptides and niacinamide. Although the segment is still new, Alagh believes the prestige skincare market has the potential to reach $4 billion in the next few years.
“IT [Luminéve] It is still a young brand and is currently under construction. We see a slim opportunity to grow the segment,” Alagh said.
Flash merchandising, which now accounts for about 10% of its total revenue, has helped the consumer goods company grow sales amid increasing competition in the beauty and personal care segment, according to Alagh.
