Honasa Consumer (Mamaearth) reported a consolidated net loss of Rs 18.57 crore in Q2 FY25 as against net profit Rs 29.43 crore recorded in Q2 FY24.
Revenue from operations declined 6.90% YoY to Rs 461.82 crore in the quarter ended 30 September 2024, while revenue adjusted for inventory correction was Rs 525 crore with the growth rate of 5.7% YoY.The company reported a pre-tax loss of Rs 24.37 crore in Q2 FY25 as compared to a profit befor tax of Rs 39.20 crore recorded in the same period a year ago.
The firm reported a negative EBITDA of Rs 31 crore in Q2 FY25, compared to a positive EBITDA of Rs 40 crore in Q2 FY24. The company posted negative EBITDA margin of 6.6%, with EBITDA Margin adjusted for inventory correction at 4.1%.
Revenue and EBITDA declined in Q2 FY25 due to one-time inventory correction amid distribution model shift.
During the current quarter, the company has executed Project 'Neev' which entails transition to direct distribution model across top 50 cities and in the process making the general trade distribution future ready. As part of the Project 'Neev' the company has discontinued super stockist layer as well as certain direct distributors replacing them with higher quality/Tier 1 distributors to service retailers across top 50 cities. Consequent to the aforesaid transition, sales return of Rs 63.51 crore has been provided for with resulting inventory/right to return asset of Rs 11.44 crore and provision for doubtful debts of Rs 2.08 crore.
Retail offtake continues to be ahead of the competition. In offline, Mamaearth face washes as well as Mamaearth shampoos gained 125 bps of value market-share YoY as of Sep '24 (as per NielsenIQ), the company stated in regulatory filing.
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On half-year basis, the company's net profit slumped 59.96% to Rs 21.68 crore in H1 FY25 as against Rs 54.15 crore posted in H1 FY24. However revenue from operations rose 5.75% YoY to Rs 1,015.87 crore in H1 FY25.
The company said that younger brands like the Derma Co., Aqualogica, BBlunt, and Dr. Sheths achieved more than 30% YTD growth in both quarters of the year.
The company highlighted that its focus categoriesface washes, sunscreens, and face serumsare growing at over 28% year-on-year in H1, adjusted for inventory correction, and are consistently gaining market share. These categories now contribute nearly 50% of the business. The company expressed its ambition to further expand these segments and aim to either become market leaders or rank among the top 3 nationally within the next 3-5 years.
Varun Alagh, chairman and CEO, Honasa Consumer, said, "Over the past few months, we've been implementing Project Neev to optimize our distribution model. In this quarter, we have taken strategic steps towards transitioning from super-stockists to direct distributors in top 50 cities. This transition has impacted our revenue and profits, leading to a slowdown for Mamaearth. However, this realignment will also strengthen offline go-to-market (GTM) strategy in the quarters ahead, setting the stage for our next phase of growth. For us, strengthening our offline GTM capabilities and bringing Mamaearth back on the strong growth trajectory are our top priorities.
Our House of Brands strategy continues to drive growth, with each of our emerging brands - The Derma Co., Aqualogica, BBlunt, and Dr. Sheths - achieving over 30% year-on-year growth in H1. In core categories like sunscreens, face washes, and serums, our growth in H1 is more than 28%. We are constantly learning and evolving to meet the changing needs of Indian consumers. Our long-term goals remain unwavering to shape the future of the beauty and personal care category in India.
Honasa Consumer is the largest digital-first beauty and personal care company with a diverse portfolio of six brands. Uniquely positioned to capture the growth trends shaping in the BPC market, the company is building brands through on trend data-based innovation and strong omnichannel distribution.
The counter advanced 1.48% to settle at Rs 369.75 on Thursday, 14 November 2024. The stock market to remain closed today on account of Guru Nanak Jayanti.
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