Indian direct-to-consumer (D2C) beauty brand Sugar Cosmetics reported its quarterly financials. Here are the fiscal 2024 results and revenue, which stand at ₹505 crore. Growth was upped 20% from the last fiscal when the company reported ₹420 crore. The company had reported a loss of ₹76 crore in the quarterly financial report. However, these are lower than FY23 where it had reported ₹76.2 crore of losses.
PC: Medium
Revenue Breakdown
Primarily, the revenues of Sugar Cosmetics have been contributed by selling a wide assortment of cosmetic and beauty products. The company also reported export sales of ₹2.5 crore and interest income of ₹10 crore in FY24, while its revenues touched ₹515 crore. The growth trend, though slower than the remarkable 90% growth seen in FY23, shows that the brand is becoming increasingly able to sustain a strong market hold in the competitive beauty space.
Cost Management
Advertisement and sales promotion cost remained the most important expense head for Sugar Cosmetics while the same was ₹162 cr in FY24, also the same as the previous year. In contrast, the procurement cost increased by 21.1% to ₹138 cr in FY24 versus ₹114 cr in FY23. Employee benefits, rent, IT services, legal expenses, and packaging that are overheads summed up to a total increase of 15.6%, stood at ₹584 cr in FY24 versus ₹505 cr in FY23.
This increased cost combined with revenue has meant that Sugar Cosmetics is spending ₹1.16 to make every rupee in the fiscal year. The firm’s return on capital employed (ROCE) and EBITDA margin stood at -31.87% and -9.22%, respectively, outlining the firm’s primary concerns in terms of profitability.
Financial Position
Even though they incur losses, Sugar Cosmetics still maintains a healthy liquidity position in reported current assets as ₹302 crores. Cash and bank balances it houses amount to ₹54 crores. Therefore, keeping on the financial cushion it generates is very important while navigating growth and operational costs.
Future Prospects
Sugar Cosmetics, so far, has raised about $85 million. Its last funding was led by L Catterton in 2022 and raised $50 million. The notable investors are A91 Partners and Elevation Capital. As per reports, the company was said to be in preliminary discussions to raise an additional $100 million on a valuation between $700 million and $800 million; the deal did not materialize.
As one of the D2C players planning to list through an IPO in the near future, slower growth in revenue would be a concern to stakeholders. Sugar may be pressured to accelerate topline growth as the company has made significant valuations-in comparison, with competition like MamaEarth.
Conclusion:
In short, though Sugar Cosmetics has managed decent revenue growth and the company has to some extent restrained losses, the overall financials reflect the harsh realities faced by the beauty brand in an increasingly dynamic market. The push on advertising costs as well as procurement cost increases necessitate strategic changes which the company needs to implement as it moves forward into its period of growth and perhaps also into an eventual public listing in the future. With the expansion of the beauty industry, Sugar Cosmetics would have to innovate and optimize its operations to maintain its top position in the D2C space.
