Fsn E-Commerce Ventures Ltd (NSE:NYKAA) Q4 FY23 Earnings Concall dated May. 24, 2023
Corporate Participants:
Sunita Sachdev — Vice President, Investor Relations and Strategy
Falguni Nayar — Managing Director and Chief Executive Officer
Anchit Nayar — Chief Executive Officer, Beauty E-Commerce
Adwaita Nayar — Executive Director
P. Ganesh — Chief Financial Officer
Presentation:
Sunita Sachdev — Vice President, Investor Relations and Strategy
Good evening, everyone. This is Sunita Sachdev. I head Investor Relations and Strategy at FSN E-Commerce Limited. It’s my pleasure to introduce our management for the call today.
On the call with me today is Ms. Falguni Nayar, Executive Chairperson, MD and CEO; Mr. Anchit Nayar, Executive Director and CEO of Beauty E-Commerce; Mr. Adwaita Nayar, Executive Director and Co-Founder, CEO, Fashion; Mr. P. Ganesh, Chief Financial Officer.
With that, over to Falguni for opening remarks.
Falguni Nayar — Managing Director and Chief Executive Officer
Good evening, everyone, and thank you, Sunita. Thank you for joining us on the call today. And it’s always a pleasure to interact with all of you. I would like to start the presentation now and request the team to move to the slides, please.
So talking about the performance highlight, I’m really happy to say that for the fourth quarter of this year, financial year ’23, we have come out with a GMV growth of about 36% year-on-year at INR2,445 crores, and the revenue has grown at 34% standing at INR1,301 crores. Gross profit continues to be strong at INR575 crores, which is a 35% year-on-year growth, and the gross margins come out at 44.2%, which is a 54 basis-point improvement over the year-ago.
On the EBITDA, the growth has been even stronger at INR70 crores — EBITDA at INR70 crores is a growth of 84% year-on-year growth. And the EBITDA margin has come out at 5.4%, which is a 147 basis-point improvement over year-on-year. Profit before-tax is at INR8.6 crores, 48% year-on-year growth and the PBT margin of 0.7. I’d like to highlight the difference between EBITDA margin and PBT is all investment for the future, which I’ll share in my next few slides, and the PAT growth has come out at INR2.3 crores, which is less healthy than expected, and I think some amount of that is due to [Technical Issues] tax planning.
Moving on, on a full year basis, again, the GMV growth is at 41%, GMV at INR9,743 crores, revenue is at INR5,144 crores, which is a 36% year-on-year growth, and the gross profit is at INR2,278 crores, which is a 39% growth year-on-year with gross margin at 44.3%, which again is a 73 basis-point improvement on a year-on-year basis. EBITDA for the full-year is at INR256 crores, again, a 57% year-on-year growth, and EBITDA margin at 5% [Technical Issues] improvement year-on-year. Profit before tax is at INR38.4 crores, albeit 19% lower on a year-on-year basis with the profit before tax margin at 0.7%, slightly adverse than a year-ago. And finally, the PAT is at INR21 crores, again a degrowth and PAT margin of 0.4%.
Going forward, I’d like to take you through some of the important items and composition of the GMV growth. So here you can see that our consolidated GMV growth was 41% for the full-year, agnostic to the full-year numbers, while you can, on our presentation, see the quarterly numbers too. So on a quarterly basis, the consolidated growth is 36% on GMV, whereas it’s 41% on a full-year basis. As you are all aware, the fourth quarter is a slightly seasonally lower quarter compared to third quarter in India, which is a strong quarter.
Talking about the Beauty category, again, the full-year growth has come out at 33% on GMV basis, and the GMV stands at INR6,650 crores. On the quarter basis, the Beauty grew at 29% — Beauty GMV grew at 29%. On the Fashion side, the full-year Fashion growth on GMV basis is at 47% with Fashion GMV at INR2,570 crores almost. And on a quarterly basis, the Fashion GMV grew 38%.
And finally, as you are aware that we are building other businesses like the SuperStore, which is our B2B business, NykaaMan, as well as international businesses. And these together account — they grew at 204% on a GMV basis on a year-on-year basis. And there, GMV has come out at INR525 crores. This is — for the quarter, the GMV for these businesses was INR152 crores, which is about 170% year-on-year growth.
Moving on, on the composition of the GMV, I just wanted to highlight that our investment in Fashion is paying off, with Fashion GMV now contributing as much as 26%-plus of our annual total GMV of the full business. The full business GMV is at INR9,743 crores, of which Beauty now accounts for 68%, Fashion at 26.4% and other businesses contributed 5.2%. So, as we said that we are trying to address larger addressable markets, with a view to provide acceleration in our growth, and that is very evident from these numbers.
From a — one of the important focus this year was to accelerate customer acquisition. And towards that, we have invested in each of the customer acquisition for each of the platforms. So if you look at the Beauty platform, where we have acquired — our annual unique transacting customer this year added 9.4 million, which is a growth of about 22% from a previous year where our annual unique transacting customers were at 7.7 million. The next number, a small pink box, is for our stores. In the stores, we service about 0.6 million customers this year compared to 0.3 million last year. This is increasing 73%. On the Fashion side, we had an annual transacting unique customer base of 2.5 million this year compared to 1.8 million a year ago, which again is a 39% growth year-on-year.
And finally, the last element, which is like on SuperStore basis, where again the customers are not really the consumers, but retail stores and others, but it also has NykaaMan numbers, where there are certain consumers. So for all of the other category, our annual unique transacting customers are at about 500,000, which again is a 30% growth over previous year. With this, total cumulative customer base at Nykaa service so far is about 24 million, a pretty large number.
Moving on, I also wanted to say that we have been investing in our — it looks like we’ve been investing in our employee headcount, but I wanted to throw more color on that. So, while our employees numbers — this is the employee count, so while it has gone up from 2,764 in financial year ’22 to 3,177, what I wanted to highlight is that there is an increase in retail and sales employee as we roll out our retail stores as well as we roll out our private label brands and many other brands into what we call is GT/MT distribution. So, this particular category of employees now accounts for 32.3% of our total employees.
Again, what you can see is that there was a large amount of investment in employee growth last year, but most of it was especially in the category of stores and sales employee count and we saw that post-COVID, after two years of COVID, there was an opportunity to expand off-line distribution, and that’s why this big focus was made. And that we have here, given all the four quarters of growth in, what we call this store and sale employee count. And you can see even in fourth quarter, that continues to be at 42% year-on-year growth.
On the other side, the core employee growth has now slowed down. After early investment in core employee growth of 27% and 25% for the first two quarters, that growth has now slowed down to just 4% by the time the fourth quarter came. And this result is evident in the fact that if you were to deep-dive in our financial numbers, you’ll be able to see that the employee cost for the fourth quarter has kind of remained flat on a quarter-on-quarter basis.
Moving on, even when we are investing in employees, which is the core employee figure that I talk about, removing sales and distribution employees, a lot of this investment is towards technology. So from the core employees, which were 2,063 employees in ’22, that has grown to 2,023 employees — 2,152 employees in 2023. Now this is an increase of 24%. But within that, the tech has grown faster and the tech employees have grown from 389 to 482, which is actually — sorry, 24% is the growth for tech employees, so tech employees have grown at 24% on a year-on-year basis. On the tech cost — tech employee cost perspective, in fact, the growth has been even higher at almost 73% growth. All of you are aware that there was inflation in tech cost last year. And the tech employee cost has risen from INR2,280 crores to INR435 crores, and this particular increase amounts to almost 73% increase.
Moving — sorry — moving on, I also wanted to show that these — I mean the work that is being done by the tech team, we see the entire tech investment is investment for future capability building. And right now, there are a lot of very exciting projects, which we’ve invested in, in the last year, and I would like to highlight some of those.
Personalization has been a big priority, and some of the work on that, I’m sure, we always say that our execution is an open book. You can see it on our apps, but a number of personalization features are being rolled out, and they’re evident and very much visible on our website. We also are building seller panels to be able to service our sellers on the Fashion side better. And the seller panel, a lot of investments have gone into building this new technology.
Similarly, Adtech is another big area of focus and improvement. As you are all aware that we’ve always enjoyed could add income, and we are now taking our ad platforms to best-in-class in the world so that our brand partners have the best-in-class ability to manage their tech investments in our company — their ad investment in our company.
In addition to that, we built a B2B2C capability to help us manage our fashion inventory better, where we didn’t want to get access to only the warehouse inventory of our brand partners. And with this capability, we are able to get fashion inventory from our brand partners, be it in their warehouse, be it in their stores or in all — wherever that inventory sits, we are able to get access and deliver from there. In addition, a lot of work being done on the attribution engine side, a lot of work being done on improving customer journey, huge investment in MarTech so that we can support complex journeys, and also a fair amount of investment in AI and ML from a discovery and recommendation perspective and many more.
Going forward, also we made big investment in infrastructure as well as in retail. And here, we’ve given four-year numbers so that you can understand why we were lagging behind. So like you can see in physical stores in the year, financial year ’21, our stores grew only 18% due to COVID impact. And hence, we’ve accelerated the growth in store — physical store, which is area in lakh square feet. This has grown by 59% in financial year ’22 and another 43% in the current year. And now, our physical store area sits at 1.5 lakh square feet across all of India.
On the warehouse, similarly, like you can see the investment was quite subdued in the year ’21. And on back of that, for two years, we’ve invested and grown our warehouse capacity by 41% and 79%. So this year, there was almost an 80% increase in our warehouse capacity. And now, our warehouse capacity stands at 4.6 lakh square feet.
On the office space, again, you can see that because of COVID work from home, we actually let go of some amount of space, and that resulted in minus 19% degrowth in our office space. And on post-COVID, we are believers in everybody coming to work. We are encouraging our employees. We are believers that coordination, cooperation all that is much better when employees come into work. So with that philosophy, we have taken more office space, and that is now, for this year, another 68% growth at 1.9 lakh square feet.
We do believe that investment in warehouse and office space is now at the last leg. Most of the investment is over, very little remains for next year, though physical stores will continue to grow over a period of time on a more prudent basis.
With that, I hand over to Anchit to talk about the Beauty business.
Anchit Nayar — Chief Executive Officer, Beauty E-Commerce
Thank you very much. So I’ll kick off the section on BPC. So, if we go to the next slide, this is just to remind everybody about what is the total addressable market and how it looks today in 2022 and how we expect it to look by 2027.
So if you look at 2022, the Indian BPC market is about a $19 billion market in US dollar terms, and that’s expected to grow at a CAGR of about 10% over the next five years to become a $31 billion market. Within that, you can see that the online share of BPC is the faster growing channel within the segment, and that’s expected to grow at a CAGR of 29%, taking the online BPC market from roughly $3 billion in size today to about $10 billion in size by 2027, and that’s where nykaa.com is a key player. If I look at the organized sector, that is expected to grow from $5 billion to $9 billion, so 14% growth. And that’s where our specialty retail brick-and-mortar stores, such as Nykaa Luxe, Nykaa On Trend and Nykaa Kiosks are playing in that segment of the market.
And finally, if I look at the unorganized retail sector, which has historically been the majority of the market, that is expected to grow almost around just about 1% or so, and that will be about a $12 billion market. And that’s kind of where our SuperStore business that we’ll talk about in subsequent slides, that’s the addressable market for that business.
If I look at what are the major growth drivers for BPC consumption in India, it is — there’s a couple of factors. First and foremost is that the per capita consumption of beauty in India is still relatively low compared to other similar markets in other parts of the world. And so, that number is set to grow on a per capita basis quite meaningfully over the coming years.
Second, what we’re seeing is, there is a shift from personal care to beauty. And as I said, these numbers are for both Beauty and Personal Care, but we are seeing a shift of consumption behavior from personal care to beauty, and that is again a trend that is seen in other markets as their GDP per capita and their consumption per capita increases, there is this shift that does occur, which is beneficial to a platform like Nykaa, which is predominantly a beauty retailer more than personal care.
Finally, as I spoke about earlier, there continues to be a shift from off-line to online. There was obviously an acceleration in the shift that had occurred during the COVID period. That had normalized slightly post-COVID with a return to off-line shopping as well. And we think the two will both grow meaningfully in the coming years, but online will continue to outpace the growth of off-line retail. And finally, there is a shift from unorganized to organized in terms of the channel mix of off-line retail.
Next slide, please. Just to remind everybody what are the key core value propositions of the Nykaa platform and what are the five main pillars on which we’re focused. First and foremost is our focus on acquiring new customers and, equally importantly, retaining our existing loyal premium repeat customers. And I think, FN had mentioned earlier in the deck that for the Beauty business today, we had 10 million transacting customers on a 12-month basis. And that goes to show you that we now have a very sizable customer base.
Second is, we pride ourselves on deep relationships with our brand partners. For us, our brand partners are crucial to the journey, which we are on to expand the BPC market in India. And we continue to work very closely with them to help them achieve their objectives in the market. Third, we continue to penetrate across the value chain and the channels in order to address the large TAM, and that has been discussed in the previous slide, basis our expansion into both physical retail as well as our B2B business.
Fourth, we remain committed to creating, acquiring and scaling a portfolio of independent new age consumer-first brands. And we’ll talk a little bit more about that in the subsequent slides. Fifth, we are always looking at new ways of retailing new, what we call is the art of retail. It remains a key priority for us. And our ability and desire to maintain a very holistic consumer connect is something which we focus on every day.
Next slide, please. So just coming to some of the key KPIs around our business. You can see that in terms of visits, our visit growth was 11% year-over-year from FY ’22 to FY ’23, and we had almost 937 million visits to the platform in this past fiscal. If I look at the monthly average unique visitors, that number now sits at about 22.7 million for the fiscal year 2023 and that was about a 21% growth year-over-year. So, clearly there has been a focus on increasing the quality of visitors to our platform that’s reflecting in a healthy growth in this number.
If I look at the average order value, despite a large number of customer acquisitions as well as an increase in the volume of traffic to the platform, our average order values have remained healthy and have remained constant at about INR1,857. If I look at orders, you can see that we serviced about 35 million orders in this last fiscal, and that was a 31% growth year-over-year.
If I come to now the second set of key metrics that we track, our annual unique transacting customer base has increased to 10 million, which is a 24% growth year-over-year. Our order conversion, and this is not unique — this is not the unique conversion, this is order conversion. This sits at 3.7%, which is almost 50 basis points higher than last fiscal. So there has been a meaningful improvement in this metric over time.
Finally, if you look at our GMV, our GMV for FY ’23 stood at INR6,650 crores, and this is a 33% growth year-over-year. And as you can see in terms of the mix of the GMV, 78% of it comes from existing customers and 22% comes from new, so again, a testament to a very loyal, sticky and high repeat cohort of existing customers who tend to transact on our platform.
Speaking a little bit about our brand mix. As I had mentioned earlier, we have very strong healthy relationships with our brand partners. Today, we have almost 3,400-plus brands listed on the platform. These include both international and domestic. If I look at our top 100 brands, roughly 28 of them are what we classify as international, 31 of them are FMCG brands, 31 of them are direct-to-consumer brands, about 16 brands are in the top 100 on what we classify as luxury brands and six brands come from our own portfolio of, what we call, the global store. But these are basically international brands which we import into the country and tend to retail with very limited distribution, mostly distribution that is limited to the Nykaa platform. So, a very healthy mix in terms of the top 100 brands that contribute to our business. There is not much overreliance on any particular brand, and there is a good mix between both international and domestic.
In terms of new brand launches for the year — for this past quarter, actually this is Q4 brand launches, there were more — in terms of number of brands, there were more that were launched, but just a couple to highlight for the audience. First is, we launched Lancome, which is a very popular luxury beauty brand that is owned by the L’Oreal Group. That launched in India with Nykaa both in our online platform as well as in our physical retail stores.
We also launched the brand pharmacy in Simply Nam, which are smaller, more niche brands, but are very popular with certain customers. And those two brands will launch on the platform as well. In terms of own brands, this quarter, we launched two new own brands, one is Nyveda, which is Nykaa’s own ayurvedic brand focused mostly on hair care and skin care. We also launched a brand called Nudge Wellness. Nudge is a wellness brand focused on beauty from within.
Next, please. This quarter, Q4, we also had an additional — we conducted a Pink Love sale. And this was a very successful sale, and we saw about 131% growth in GMV year-over-year versus a similar sale which we had done in February of last year. We had over 2,000 brands participate in this Pink Love sale. There was a lot of pre-buzz engagement activities that were done to drive traffic to the platform and these are listed on the page.
In terms of creating awareness and driving engagement for the sale, we partnered with a large number of influencers. And this allowed us to generate close to 144 million impressions during the sale period. We also piloted — sorry, not piloted, but we also expanded our watch and buy. So this is our social commerce feature, where live streaming is conducted on the app itself. And this proved to be very popular with this sale with over 33,000 visits from customers watching the live streams on the app during the sale period.
Next, please. If I look at our physical retail business, we’ve invested — I think, really for us to improve the customer experience, we’ve invested across building out our physical retail network. And as you can see today, we have about 145 stores across the length and breadth of the country. We cover today 60 cities across India, and this is up from about 104 stores last year. So, 41 new stores will open this year. The physical retail business grew at a 67% year-over-year growth. And today, that business, in GMV terms, sits at about INR550 crores of business and contributes to about 8%, 8.5% of the total Nykaa’s total BPC GMV.
In terms of some other key metrics on the retail business, same-store sales growth in FY ’23 versus ’22 stood at 36% roughly. And this is for the cohort of stores that were opened prior to March 2021. If I look at the GMV per square foot, that number has also improved to about INR3,271, and the total area that we cover in terms of square feet of retail space is now at 1.4 lakhs, and it’s a 43% growth year-over-year.
Now moving on to our distribution of our own brands. Today, our own brands are available across almost 2,750 general trade and modern trade doors, and that is a 41% growth year-over-year. This business now is accounting for almost INR274 crores of — INR275 crores of revenue to the company. As mentioned in the earlier section of this presentation, there has been a meaningful investment also in terms of fulfillment centers. And we have taken our fulfillment center count up from 25 in FY ’22 to 38 in FY ’23. And today, we have fulfillment centers across 15 cities. So, the area growth in terms of the fulfillment centers has been a 55% growth. This has been driven mostly by regionalization strategy.
So, the push was to increase the coverage — the regional coverage of our warehouses, and this has played a very meaningful role in improving the customer experience, bringing down the order to delivery time lines and also helping us to reduce our fulfillment expenses. As a result, our split shipment ratio has gone from 1.3 to 1.17, again, a testament to the fact that regionalization strategy for our fulfillment centers has played out nicely.
Now, focusing a little bit more on our house of brands. You can see that from our GMV — there has been meaningful GMV growth in our own brands year-over-year. Today, our own brands contributed about INR790 crores of GMV and that’s about 12% of our overall BPC business. We have 12 owned brands and the growth in GMV has been about 40% year-over-year.
In terms of our key own brands, Nykaa Cosmetics, which is our largest own brand today is about a INR250 crore brand on a GMV basis. And interestingly, and I think the good news for us is that now both Kay Beauty and Dot & Key — Dot & Key was an acquisition, a brand which we acquired, both of these — and Kay Beauty is a joint venture brand, which we have with Katrina Kaif. Both of these brands today are now — have also scaled nicely to be about INR130 crores in terms of annual GMV each.
We have now 1,600 SKUs across our own brands portfolio. And these brands are now distributed across 2,580 selective doors of both general trade and modern trade. Additionally, our own brands are now reaching 5,400 retailers through our eB2B SuperStore app and business as well. This is just some imagery of some of the new launches within our own brands that we had in Q4 of this year. You can see across Nykaa Cosmetics, Kay Beauty and Gentlemen’s Crew that were meaningful new launches in very important L3s.
Next slide, please. And even the brands, which we either — have an investment in or we have acquired, there has been meaningful new product development within their portfolios as well. Finally, just one additional new item we wanted to share with the forum is, we have a property that is known as the Nykaa Beauty Bar. The Nykaa Beauty Bar was an on-ground event where we invite our consumers to come and interact with certain makeup artists and influencers as well as participating brands in a physical setting usually in the malls where we have our own physical retail stores.
So after a period of about two years, because of the pandemic, during which we did not conduct the Nykaa Beauty Bars, Nykaa Beauty Bars are back and we are hosting them at a regular cadence. This is just one case study of one particular beauty bar, which we held in Q4. This was conducted in Lucknow. This particular beauty bar generated almost 4 million impressions on social media. We had 1,300 customers in the Lucknow area who registered for the event. And there were 16-plus media houses and 11 influencers who covered the event to generate significant buzz and awareness for the event as well. And as you can see from the images, these are very well attended and are very, very highly sought after and anticipated by our consumers in the towns in which we host these events.
Next, please. Now I think earlier in the deck, we spoke about the investment which we’ve been making in technology. And on this slide, we’ve just shown a few of the initiatives which were undertaken by the technology department this year that we thought is worth sharing with the broader audience. First is a big initiative around paperless speaking. So, this has allowed us to basically move to zero paper utilization in our warehouses. But importantly what this has enabled is, it has enabled us to increase the order fulfillment capacity and the productivity of our warehouse staff through this automated paperless picking technology that has been rolled out.
Secondly, we’ve also launched an ability for us to nudge our consumers to complete incomplete shopping baskets through various interventions across both the PDP and PLP page. There has also been a big focus on personalization, one example of which is pushing consumers to replenish certain products that they have bought in the past. So personalization has been a big area of development for us where basis consumers previous buying behavior or browsing behavior, we’re able to personalize a relevant assortment and the relevant product to show to that particular consumer. So very beneficial for the consumer, very beneficial for our brand partners and, of course, for us as a retailer as well.
And with that, I’ll hand the mic over to Adwaita to take you through the Fashion section.
Adwaita Nayar — Executive Director
Hi. Hi, everyone. Thanks, Anchit. So I look forward to discussing the fashion business with everyone. So to begin with, we remain extremely excited by the size of the fashion market. The fashion industry is 4 times to 5 times larger than the beauty industry. And according to Redseer, the fashion market was INR77 billion in 2022 going to INR147 billion, growing at a CAGR of 14% by 2027.
In terms of the key drivers that we see in this space, we think that the fashion industry is going to be driven by increasing digital penetration, the disruption by D2C brands. There’s definitely a willingness to try new brands, premiumization across the category and then personalized experiences. Customers are demanding more personalized experiences and, finally, a shift from just pure fashion to lifestyle, including the emergence of new categories like sport, athleisure, technology and the home category.
So when it comes to building Nykaa Fashion, I have five main focus areas. The first is customer acquisition and retention. The second is strengthening external brand assortment. The third is accelerating our own brand strategy. We see this as a real fashion-centric opportunity and a future moat for the business. Fourth, operating — exploring new operating models and channels of growth. And finally, fifth, innovating their technology to constantly improve discovery, shopping and post-order experience.
Double-clicking on these, first, we’ll talk about the key performance indicators. First, our total visits are up 14% year-on-year, hitting 504 million for FY ’23, and our average monthly unique visitors are up 13% year-on-year to 17.3 million in FY ’23. In the bottom left table, you can see our AOV trends. On a year-on-year basis, we’ve seen a gradual increase in our AOV, and this is a reflection of our differentiated positioning. The FY ’23 AOV at MRP is 4,512 and at selling price, that is post discounts, it is 2,537. Overwhelming majority of these discounts are funded by the brands.
Moving on, we now see the bottom right, and you can see that orders have grown at 42% year-on-year to 4.8 million in FY ’23. And importantly, our conversion rate, which you can see below the bar lines, has increased from 0.8% last year to 1% this year. And this has been a really big focus area.
In summary, we’re really focused — sorry, if you can go back. In summary, we’re really focused on finding and attracting the right type of customer. We’re also really focused on improving the site experience to drive conversion. So driving visits for the sake of visits is really not the focus. And it’s this strategy, which is now paying off, and you’ll see it later that our marketing spend has come down significantly. In quarter four, our marketing spend is at 27.3% of MSP versus 30% for the same quarter last year.
Moving on to Slide 32, our trailing 12-month customers. So these are consumers who transacted with us in the last 12 months, has increased to 2.5 million by the end of quarter four, and this is a 39% year-on-year growth. The Fashion GMV grew from INR17.5 billion to INR25.6 billion, which is a 47% growth year-on-year. And from a quarter perspective, it’s grown 38% year-on-year, reaching a Q4 GMV of INR6.6 billion.
Finally, the chart at the bottom left shows the mix across women’s, men’s, home and kids. And while we are predominantly focusing on women and men’s, I am excited by the fact that kids and home can be future opportunities that we tap into at the right time.
On the next slide, I talk about assortment. I really feel that assortment is at the heart of our business and providing curated and fashion-forward merchandise is our right to win. We look at assortment in a couple of different buckets, and I’ll walk you through that on this slide. The first is a bucket on the top left, which is the popular brands that already exist in India and have strong customer recall. So these are Puma, Biba, Marks & Spencer, Forever New and Adidas. Being a strong partner for these brands is extremely important for us and will always be a focus.
But it’s the next open of buckets from which our differentiation arises. First, we’ll talk about global store. This is our portfolio of international brands that we brought into India often exclusively on our platform. It’s been our largest focus area over the last 12 months, and some key partnerships that we’ve had include REVOLVE, which is truly one of the world’s most leading fashion retailers. We integrate with their entire sites. They’re a retailer, so they have over 500 brands, and we’re able to bring those 500 international brands to the Indian consumer.
Another big win is Alo Yoga, today one of the world’s most popular athleisure brands, which we launched exclusively in the country. And then, Cider, which is again an exclusive launch that we’ve had, which is a very popular Gen Z brand. This whole offering is really resonating with the consumer. And today, the global store contributes 25% of our western wear sales.
Moving on, in terms of differentiated offering, I talk about Hidden Gems. This is the property I’ve spoken to you about before. It includes emerging Indian designers and labels, and it’s really sought after. And this is contributing 6% of the Nykaa Fashion GMV is coming from this assortment or 20% of the Indian wear assortment is coming from the Hidden Gems segment.
Next, we have First in Fashion, which is really our new season focus. This is really what brands love us for that we’re able to sell their new season merchandise. And in Q4, 23% of our sales came from new season merchandise, which is a fantastic metric. It’s much higher than what we saw last year. Later, I’ll talk about some of the omni-channel technologies we built where we connect with brand stores, and this is allowing us to get new season merchandise in a very timely manner.
Finally, lastly, we have the luxury offering and the responsible offering, smaller offerings, but again, provide that sort of layering and make our merchandise more interesting.
Moving on, a key focus for us over the last few years has been to incubate and grow our own brand strategy. Our own brands portfolio has been nurtured to occupy clear market and price positioning, and this slide here talks to you about the brands that we’ve acquired and then many that we have built internally. As you can see, we have 13 brands today and we’re trying to very systematically go after category by category, price point after price point. And at the same time, we’re really trying to build brands that has great customer love and connect. These are not private labels that we’re trying to build. In this year itself, we have launched seven new brands, taking our count to 13.
Moving on, this is — private label portfolio, you can start to see some of the brands in terms of what they look like. And the point I’ll make here is, we have over 20,000 styles available across the brands, and every month we’re launching 700 to 1,000 new styles. And I think it is a very key ingredient of making Nykaa Fashion an interesting place and will be a very strong future mode for the business.
Moving on, in terms of how this portfolio is doing from a GMV perspective, here you can see that the owned brands GMV stood at INR3.3 billion for this financial year. It’s a 141% year-on-year growth. It’s something that I think we’ve done a terrific job with. And in terms of share of business, this owned brands business is contributing 12.9% of the fashion overall GMV, up from 7.8% last year. And if we look at this penetration at an NSE perspective, it’s even higher. From the 13 brands, the largest ones would be 20 Dresses and NA-KD, which have crossed INR150 crores and INR85 crores run rates and are growing extremely well. Like I said, these are not private labels, but really brands with true customer connect, and we aim for them to have their own identity. And to this end, we retail on third-party e-commerce platforms and we also have off-line distribution ambitions.
In terms of off-line here, you can see that we’ve added MBOs for 20 Dresses in RSVP. We’re in over 112 MBOs. Nykd by Nykaa has tremendous offline presence. This is our lingerie brand. We have over 900 points of sale in terms of general trade and four EBOs and we’re expanding this. And overall, all of the third-party sales is contributing about 48% of that INR3.3 billion number. So the point we’re really trying to make sure is that these brands are really emerging well, and they do have traction far beyond just the Nykaa platforms. And I think that’s a great sign of customer connect.
In terms of a quick new launch that we’ve done this quarter, I’m really excited about launching Nyx. This is a very Gen Z-focused brand. And on the next slide, I’ll show you a quick glimpse of what the imagery looks like.
Moving on, you’ll have a glimpse of what our off-line presence is starting to look like for some of these owned brands. You can see the Nykd stores on the top left. You can see some of the MBOs on the right. And move on. Here, actually I’m showing you what the multi-brand format. So this is not just private labels, but a multi-brand format that we’ve been experimenting with. We’ve spoken to you about it last quarter and the quarter before. We’ve experimented with four stores this past year. They’re ranging from 1,000 square feet to 5,000 square feet, a mix of owned brands, but also a mix of curated interesting third-party brands. The idea is to create a new-age format, where one can find differentiated millennially-focused fashion. At this point, though, the intent is to get the format to work and to hone in on the size and the product market fit before we expand further. And so as and when we have more plans here, we’ll update you.
So here, just quickly, we’re always working on the operating model. So, we’re developing global [Technical Issues], integrating with physical stores within the country. We’ve invested in warehousing space. Our warehousing capacity in Fashion has gone up 3.5 lakhs. So while we remain super marketplace-focused for our third-party business, as our own brands business becomes larger, we will be needing more space for that.
On these slides, we just show you a quick glimpse of what we’re doing from a technology point of view. So whether that’s personalization, which the Fashion platform has really embraced and it’s a big part of our strategy going forward, whether it’s launching interesting customer features, like being able to refund a wallet, a lot of innovation on the recommendation engine, which drives a huge part of our business, actually comes from these recommendation, which is what we recommend for the customer.
And on the next slide, the ability to have live commerce, building a property called Editor’s Picks, and then finally, doing a bunch of events to engage with the customer and do right by the brands.
And so with that, I’ll hand over to Falguni to take us through the SuperStore section.
Falguni Nayar — Managing Director and Chief Executive Officer
I think, on the SuperStore section, just coming in on the size of the market, I think this is a chart that is being repeated here from earlier chart that we saw on the Beauty side. I think, the GT/MT market continues to be large at $12 billion and, as a result, we saw the need to come in and have our offering there, and it comes in form of SuperStore. This is a business we launched a couple of years ago. And like we said that we want to serve the underserved both in terms of brands, manufacturers as well as the retailers. And with that focus, we’ve been building a very specialist distribution channel.
Talking about — speaking about our performance in quarter four, like all of you can see here that our transacting retail account has jumped to about 1.1 lakh retailers, which is almost 5.8 times jump from a year ago. The number of brands listed is also now at 190, and that’s grown at 1.4 times. I think there is interest from more brands, but we are taking it slowly. We also have served retailers in almost 700 cities, which is 2.3 times a year ago. And our order volume is at about 728,000 orders, which again has grown almost 15 times from a year ago.
We have always believed that our technology footprint will allow us to succeed in the eB2B market and very differently compared to most of the market. So we have invested in our technology, and this technology investment comes in two, three forms. One is, we have developed features, which are very retailer-centric, like a one-click access to best price because finally for a retailer best price matters, personal recommendations for a retailer, again, very different from how the consumer will look at it, as well as on the BD, which are our feet on street, we have now ability to have even let and long check-in on the sales and delivery, and that allows us to really monitor our networks much better for their efficiency.
These are just some examples in scaling technology and infrastructure. There are many more, but this is just to give you guys a flavor of the kind of stuff that is going on.
With this, I would like to now hand over to Ganesh to take us through the next section on financials.
P. Ganesh — Chief Financial Officer
Thank you, Falguni. Good evening, everyone. I would like to take you through our quarter four FY ’23 and full year FY ’23 financial update.
So, as we can see on Slide number 48, our revenue grew by 34% Y-o-Y during the quarter and at 36% in FY ’23. Gross profit grew by 35% Y-o-Y and 39% for FY ’23. Our gross margin was at 44.2% during the quarter and continued to be strong during the year at 44.3%. We achieved an EBITDA of 5.4% during the quarter. And for the full year, this number stood at 5%. And this also benefited from the operating cost leverage. Our EBITDA grew by 84% during the quarter and by 57% for the full year.
Our PBT margin was at 0.7% in quarter four FY ’23 and similar number for FY ’23. And as Falguni mentioned, the drop between EBITDA and PBT margins is on account of the investments we have been making for the business. There was also an incremental impact of around INR23 crores on account of IndAS lease accounting, which we’ll dwell deeper in subsequent slides.
So going to the next slide, Slide number 49, I’d like to bring your focus on this slide in terms of operating expense as a percentage to revenue standing at 38.8% versus 39.7% in quarter four FY ’22, which is an improvement of 93 basis points Y-o-Y. Clearly, the regionalization of our fulfillment centers has enabled lower airfreight and also rationalizing our marketing expenses. All of these have resulted in better leverage on this front. Fulfillment expense as a percentage of revenue was at 7.9% during quarter four FY ’23 versus 9.7% in quarter four FY ’22, which is an improvement of 180 basis points Y-o-Y. Similarly, marketing cost as a percentage of revenue was at 11% during the quarter versus 12.3% during the same quarter last year, an improvement of 130 basis points Y-o-Y.
Again, as Falguni mentioned, while we have seen a slight increase in employee costs as we did hirings ahead of the curve [Phonetic] to funnel the growth, I’d also like to share is that employee cost was flat during the quarter on a sequential basis — on a Q-o-Q basis.
Going over to the next slide, Slide number 50. This slide will give a better understanding of our EBITDA margins change Y-o-Y. And as you can see, we have provided the EBITDA margin waterfall chart. Gross margins improved by 73 basis points, led by change in category mix and change in private label mix. Fulfillment costs improved, and this has been through our regionalization strategy. And this has seen an improvement of 164 basis points Y-o-Y during the year.
Marketing efficiency achieved through improved marketing spend strategy resulted in an improvement of 129 basis points. Selling and distribution costs increased due to off-line distribution of owned brands and expansion of our eB2B business and increased by 88 basis points Y-o-Y. Employee costs increased due to investments into new initiatives and investment into the [Indecipherable] function and increased by 92 basis points in FY ’23, and other expenses increased due to investment in infrastructure and technology.
Going over to the next slide, Slide number 51. This explains the waterfall from EBITDA margins to PBT margins, which gives a lot more color on the investments that we are making and its impact on depreciation lease accounting, etc. While depreciation increase Y-o-Y on account of incremental capex in retail stores, warehouses, offices, lease cost increase has been due to additional retail stores, warehouses and offices as we ramp up infrastructure. Interest on borrowings increased Y-o-Y on account of incremental borrowings to fulfill working capital requirements. And as I mentioned a while earlier, lease cost as per IndAS was higher by around INR23 crores for the full year versus the cash lease payout.
Going over to the next slide, Slide number 52. Here we can see the vertical performance, which gives you a good insight into the economics across businesses. As you can see, the disclosure here is at the contribution profit level because many of the costs, for example, employee costs, etc, are used very dynamically across verticals. And it would be difficult to allocate these common costs on a quarter-to-quarter basis.
I would like to bring your focus on the bottom part of the table, cost items are calculated on an NSV basis as the three business verticals become comparable in NSV terms. So looking at gross margins, BPC margin was at 46.8% during the quarter versus 44.1% in quarter four FY ’22. Fashion gross margin was at 43.2% during the quarter versus 47.1% in Q4 FY ’22. Others gross margin was at 20.9% during the quarter versus 22.7% in the corresponding quarter last year.
We saw an improvement in our fulfillment expenses. For BPC, it was at 7.4% versus 9.3% a year ago. For Fashion, it was 10.4% during the quarter versus 11.7% a year ago. [Technical Issues] 10.2% versus 14.8% in Q4 FY ’22. We have improved marketing expenses. And as you can see for BPC, it was at 7.9% in quarter four FY ’23 versus 8.7% in quarter four FY ’22. In Fashion, it was at 27.3% versus 30.1%, and others stood at 8.9% versus 23.2% in quarter four FY ’22.
We have been investing behind selling and distribution expenses. And as you can see for BPC, it stood at 3.3% versus 3.5% in the corresponding quarter last year. In Fashion, it stood at 2.9% versus 2.7% in Q4 FY ’22. And for others, it was at 17.4% in quarter four FY ’23 versus 19.5% in quarter four FY ’22. Contribution margins have overall expanded by 360 basis points. For BPC, it was at 28.1% versus 22.5% in quarter four FY ’22. For Fashion, it was at 2.6%. And for others, it was at minus 15.6% versus minus 34.8% in Q4 FY ’22.
Moving on to the next slide. Here, we have the vertical performance for our business for the full year. And where, again, we have demonstrated improved contributions despite investing in customer acquisition and incubation of new businesses, which are only deepening our mode.
Gross profit margins for FY ’23. BPC gross margin was at 46.4%, Fashion gross margin was at 44.2%, and others gross margin was at 24.2% in FY ’23. Contribution margins have expanded by 280 basis points. BPC in FY ’23 was 26.5% versus 21.7% in FY ’22. For Fashion, it was at 2.2% versus 2.8% in FY ’22. And for others, it was at minus 19.9% during the year versus 31.8% negative in FY ’22.
Moving to the next slide. Here, we have the full profit and loss account statement. And as you can see, our revenue grew 34% Y-o-Y to reach INR13,017 million in quarter four FY ’23. And our EBITDA margin stood at 5.4% during the quarter versus 4% in quarter four FY ’22. And our PBT stood at INR86 million in quarter four FY ’23. I believe we have continued to improve our scale efficiencies in this current macro environment and with the online offline rebalancing panning out and as is a major part of our investment across infrastructure and people.
Moving to the next slide, which is our balance sheet. As we can see, our inventory days have been fairly stable, so also our receivable days. And payable days when we look at it, I would like to also just point out over here that the trade payables and the other financial liabilities need to be read together to get a full picture of where the trade payables stay.
Moving on to the next slide. Here, you have a summary of the cash flow. And as we can see, operating profit for the year stood at INR283 crores. Working capital to support the increasing business went up by INR309 crores, led by inventory buildup for the upcoming sale events as well as with the introduction of new announces during the year.
Capex for the year stood at INR208 crores, while investments in subsidiaries and associates was at INR70 crores. Cash and cash equivalents stood at INR41 crores as of 31st March 2023.
Thank you, everyone, for attending the quarter four FY ’23 earnings call. I would now like to request Brinda [Phonetic] to kindly initiate the Q&A session.
Questions and Answers:
Operator
[Operator Instructions]
Falguni Nayar — Managing Director and Chief Executive Officer
I think I had seen certain questions on physical retail. So I just wanted to highlight that we give consolidated omnichannel numbers most of the year. And only at the end of the year, we gave the mix in terms of what percentage of our turnover is contributed by retail. But I want to just share that as far as our retail business is concerned, it is able to cover all fully caused, like all of the cost. You can see that it now contributes almost 8.3% of our GMV. And it is — it’s been able to — I mean — cover its full cost of the business. So the stores have been profitable throughout the year on a fully costed basis, which includes recovering the depreciation and interest cost also.
Operator
Okay. We move on to the second question then. What is the expected growth in personnel and other expenses in FY 2024?
Falguni Nayar — Managing Director and Chief Executive Officer
I think we would not like to give very clear — I mean, too much of a guidance towards where it will come out next year. But all I can say is that we were quite conscious about the fact that last year, the employee costs kind of grew a lot. And we tried to explain it by how these investments were made in the area of technology in the area of sales and distribution network as well as new businesses that we were supporting. However, since then, we have taken cognizance of the fact that there was a need to control these. And the core employee growth in headcount has been brought down to as low as 4% in fourth quarter.
And I think this will continue — this emphasis will continue next year also. So we are being extremely prudent about our people cost in the core business. Of course, the retail and sales employee in the store rollout will happen. I think even as far as the store rollout is concerned, we are being prudent and cautious about the store rollouts from this current level of stores that we have. I’m not saying we won’t grow them, but the planned store rollout is also — is prudent. And I think given all of that, we do feel that our people costs will be under control in the coming year.
So I think people must have answered. I think general expenses also, we think they were a little bit out of control, and they are being brought under control, but it’s harder to explain that.
Operator
Sure. The next question is, [Indecipherable] in fixed operating costs, capital leverage playout, resulting in higher PBT margins going forward?
Falguni Nayar — Managing Director and Chief Executive Officer
No. So like we said that we have been controlling all items of cost. So first focus was on our fulfillment costs, and you can see we brought it quite a bit under control. Second is, of course, we had to invest in warehouses to do that. So, of all our investment below the EBITDA line, 25% of that investment was towards warehouse. But we think that warehouse rollout is at the end of the cycle and there should not be too much investment in warehouse at least for the next one, 1.5 years. That’s on the fulfillment side.
I think, on the — so I think that’s where some amount of curtailment of costs will happen. I think from a store perspective also, while we may roll out spare number of stores next year, but on a base of 145, that growth will be lower. And as a result, again, you will see some curtailment on that count. So, I think, below — from EBITDA to PBT line, it’s this element of lease rentals and depreciation and amortization, which we are definitely controlling, but we also see these as investments for the future. And believe me, we are being very prudent about doing what is right for the business. And I think we do believe that these are right investments for the business.
As far as above EBITDA line is concerned, a lot of improvement has already come into fulfillment and marketing. The same focus on improving those will continue. However, there was some amount of lack of focus on employee and other expenses, and that you will see change this year. And there should be — we are hoping that these turn green in the coming year, I mean the rate of change turns green in the coming year.
Brinda, you want to take the next question?
Operator
The next question is, what will be the key margin drivers from here on? Do we see double-digit margin possible in the next three to four years?
Falguni Nayar — Managing Director and Chief Executive Officer
I’m assuming you mean EBITDA margin or are you talking about PBT margin? I think it’s not very clear from the question probably. I think, clearly from an EBITDA margin perspective, it is a mix of margin. I think that’s why we give — we keep sharing information for our businesses. Both Beauty business enjoys very good EBITDA margin and Fashion business is at an investment phase. And as we feel that one of the important element of cost there is marketing costs. And as the mix of new customers to repeat customer ratios improve, marketing cost comes down. We’ve seen this in beauty business, where over a period of time, as the repeat customer ratios improve, the marketing cost comes down. So that would be a driver of profitability improvement.
In the other businesses, on NykaaMan, it would be a similar thing playing out, whereas SuperStore business, I think, again, with scale would come improvement in marketing and sales and distribution costs. So, I think, the SuperStore business has more sales and distribution costs, and there, with increasing scale, you’ll see improvement in that cost. So, yes, there is a possibility of better margins on the EBITDA level as more and more of our growth businesses turn to maturity phase where the cost structure on marketing and other selling and distribution cost improves.
Operator
Okay. Next question is, fashion contribution margins continue to worsen year-on-year for full year, while similar for the quarter despite higher scale. How do we get benefits of scale in this business?
Falguni Nayar — Managing Director and Chief Executive Officer
I think, in this — please do remember that all our businesses, like Beauty and Personal Care, is a combination — or beauty online, physical retail, which like we showed now is close to 10%. Obviously, e-commerce profitability is better than physical retail profitability, but we believe that right mix is needed because why should Nykaa customers go into third-party retail stores when they want to once in a while try out something like a foundation or a lipstick. So, in my mind, physical retail is a certain investment that we need to make, even if it is adverse on overall profitability. So the optimum mix of online, off-line in Beauty is what we are chasing. Also, Beauty is supported by private label, which can grow faster, in which case, again, the profitability can improve.
Similarly, Fashion is also a mix of both fashion.com, which is a platform level of profitability as well as private label brands. And like you saw in the conversation that Adwaita shared, we have invested in a lot of fashion brands in the last year, and many of these were essential to success of the platform itself. And these brands have all — as they become like some of our old brands like 20 Dresses and NYKD, which are at a higher scale, they are profitable. But obviously, as you launch the new brands in the initial time, initial years, first year, you end up making more investment in getting the brand get off the ground.
So, I think, the fashion margin also need to be seen in light of a consolidated fashion business, which has invested in a lot of private labels. These, we believe, next year, private label business for fashion will be kind of breakeven. And the platform business of fashion also can breakeven any time if we don’t acquire a new customer, but we want to continue to acquire new customers.
And as far as the mix of new to repeat customer is 50-50 or 60% on new customers being acquired, I think it is hard to bring down the marketing costs. And as the business becomes large enough, where the new customer ratio versus repeat customer ratios are better, which happens in fourth — third, fourth and fifth year, now we’re entering fourth year of fashion. So, as that happens in fourth and fifth year of the business, we do feel we’ll be able to bring down the marketing costs.
Adwaita Nayar — Executive Director
Yeah. And I think I’ll just add to that. But I feel like when we’re building any new business, there’s a year of sort of like peak loss, peak investment. I definitely feel FY ’23 was bad year for fashion. And the intent is, you turn the corner and you coming down the hill from there. So, it was also sort of the peak year of investment, and it is sort of a natural cycle of building a new business.
Falguni Nayar — Managing Director and Chief Executive Officer
I think, just to repeat what — because I saw one of the question and to repeat what Ganesh said, just believe us when we say that a lot of our employee costs are for fixed platform, like on the technology side, as much as 65% of our employee costs is a fixed platform cost and — platform costs, not one platform, but multiple platforms, which are being shared by multiple businesses. And because of that nature, we don’t allocate our employees across the three, four business verticals. And there is a fair amount of employee costs across the finance and tech and all, which is a central cost.
Now, these can be allocated on some basis of revenue or — say, revenue or NSV, which you — I mean, I think most likely revenue or NSV, which I think all of you can also do because you have all the elements available there. And that is the reason why we are going all the way up to contribution margin, which are all of the direct attributable costs, and we are not going below that in allocating the employee costs.
Operator
Okay. Next question is FCF as well as OCF for the company continue to be negative and net cash on balance sheet seems to be zero. How do we manage our cash requirement? Do we need to raise funds and [Indecipherable]?
P. Ganesh — Chief Financial Officer
Yeah. So, as far as the business is concerned, you would have seen that the beauty business is making significant amount of money. At the same time, fashion business, which is relatively newer, is still in investment phase, and same thing holds good for the eB2B business as well, which is actually into its first year of business. So in a sense, we are looking at all these businesses. And the beauty business in a sense is actually also helping fund the growth of the newer businesses.
So when you look at the overall cash position, what you would see is that the operating profits have more or less gone to fund the working capital increase. That’s what you’re seeing in the full year FY ’23. And what I would like to also say is that we manage our cash flows quite dynamically. We still have some amount of funding from the IPO, which will get utilized over the next one year. And there are also banking lines, which are available in terms of credit lines. So that’s the way we look at the funding happening going forward.
And what I would also like to add on this is that while there has been a good amount of increase, which we are seeing in working capital, as the scale increases, the working capital days would also start moderating. And that will also mean that the amount of funding which gets logged into working capital, we should see some moderation going forward.
Operator
Okay. The next question is from Nehan [Phonetic]. Is the fulfillment cost and marketing expense readjusted to current trends permanently? Also in marketing, is the focus on performance marketing to drive conversion more efficient from an overall spend perspective?
Falguni Nayar — Managing Director and Chief Executive Officer
Yeah, I’ll take that question. So, I think, from a marketing perspective, we’ve been big believers in performance marketing. And I think about 85% — 80% to 85% of our spends are on performance marketing. I just say 80%, 85% because there are certain enablement costs which fall between performance, also partly mainly towards performance marketing. So that’s how it is. We do non-performance marketing, all you can say non-digital marketing is less than 10% to 15% for Nykaa.
I think, on the fulfillment cost, we do believe that these are new fulfillment cost numbers, which are here to stay. And there we are very focused on really — there are big projects which are tech supported for improving, giving certain serious advantages to our warehouses in how they operate. And with that, their productivity and everything of productivity as well as efficiency would go up. And we do believe that these benefits will stay, unless some huge inflationary pressures come under full year networks.
Operator
Thank you. The next question is from…
Falguni Nayar — Managing Director and Chief Executive Officer
So I want to continue to, again, emphasize that our warehouse rolling network rollout is also almost complete with the exception of one or two small warehouses, at least for next 1.5-year period. So that also will not lead to additional hits below the EBITDA line.
Operator
The next question is from Kapil Singh [Phonetic].Can you talk about market conditions that you’re observing in beauty and fashion? Is there any divergence in trends? I ask because the NSE growth for fashion business has slowed down and lower than beauty business on a lower base. Do you still expect fashion to grow much faster over the next two to three years?
Falguni Nayar — Managing Director and Chief Executive Officer
So, on the beauty side, I don’t know if Anchit wants to come in and talk about the global — Anchit, do you want to talk about the global, what we learned about how strong the beauty business is from a global perspective? Yeah, just come in for a minute. The two are driven from different perspective. I think beauty currently is doing very well globally and we are seeing the benefits of that, and Anchit will talk more about it.
On the fashion, from near-term perspective, the physical store network of domestic brand was very large. And as a result, as the domestic stores open, there was some adversity in growth. But we are continuing to build the international brands on our platform. And again, there’s a lot of interest, and that will help with growth. But with that, I hand over to Anchit, and then later to Adwaita.
Anchit Nayar — Chief Executive Officer, Beauty E-Commerce
Yeah. Thank you. So — yeah, look, I think if you look at it from our global brand partners, their perspective on India is that it is clearly — it has become a key priority market for them, especially after everything that happened in China, the kind of lockdown that they faced in China, the kind of impact to their business they saw there. I think a lot of global partners are looking to diversify and derisk from that market, and India is a clear winner in that scenario. So, I think, in terms of long-term strategic priority, India has emerged as probably top two or three priority markets for most global beauty companies. So that is, of course, very good news from us and good news for players like ourselves.
That being said, I think, if you look at some of the data that’s out there in terms of the last quarter, Q4, with regards to BPC volumes, that was slightly muted. Numbers that we have is around 11% volume growth for BPC online, but we’ve obviously grown a lot faster than that. As you can see from our results, we’ve outpaced the online BPC growth that is currently being seen by other competitors in this space. So, I think there was slight pressure on consumption of beauty in India in the short term in the past few months because of inflation and certain price hikes that brands had passed on to the consumers, but we think we’re beyond that and we’re past that now.
And we do see consumption at quite healthy levels in the short term. But I think long term, the picture is still very, very bright. As I said, a lot of global focus on India as a market. And as I spoke about earlier, the per capita consumption is at some of the lowest levels in the world, and they’re seeing — we are all seeing very early signs that this is improving in a very meaningful way.
So, I think outlook over the next 12 months is positive, but, yeah, there is some short-term pressure that we saw in the past quarter — that the industry saw, which didn’t impact us too much because obviously our customers are more premium. We are on the slightly more premium end of the scale when I look at our customer base. And so, we didn’t feel that impact to the same extent.
Adwaita Nayar — Executive Director
Yeah. I think I can comment a little bit on fashion. So, I think, a couple of thoughts and points of views on what’s happening. So I do feel that last year and the year before that was an amazing period for fashion, given COVID and given the fact that there was this insane digital uptake in penetration. And I do feel that fashion — Nykaa Fashion really benefited from that and grew extremely well for the prior two years. I think this year that we have just ended was working off a more normalized world where we did definitely see that demand was definitely going back a bit off-line. And the growth that was so easy in the first three years didn’t feel as easy in this past financial year.
I think, you also saw a bit of change in behavior when it came to returns. So you saw it during COVID, there wasn’t much returns at all. And then this past financial year, returns picked up as well. So that would be affecting NSP a little bit. I think, a second philosophy I’ve sort of developed is that fashion is a massive market and growth is not the challenge. Actually, one can grow very, very easily, and we have some competitors out there who’ve shown us the playbook on how that can be done.
However, I think there’s a lot of bad noise in that type of growth and it can lead to very — it can lead to a lot of pressure when it comes to profitability. So, I think this year has also been a year of immense learning when it comes to understanding what growth comes at what cost and being able to kind of decipher what growth — of all that type of growth you could get that you really want, which brings me to my sort of third thought and philosophy, which is that we really wounded on deciding that at least for the next six months, nine months, we want to get the right quality of traffic and the right quality of growth.
So, you’ll see us really focusing a lot on the shape of the brands that we’re selling, on the type of categories that we’re selling, the type of customer that we’re acquiring. Everything from saying, okay, we want more women, the retention of women is looking a lot stronger than a lot of other categories. We want XYZ type of categories because their retention is better. We want these type of categories because their returns are better. So you could see that we’re entering a phase of really trying to shape the type of business that we get because we think that we’ll then have the right unit economics in place. And from there, it will be easier to scale up.
So that’s kind of how I would summarize that not really going after growth at any cost, but just really wanting to shape the business in a way that helps us really get the right type of customer, the right quality, and not get distracted by high-growth categories, but can have lower retention in the long run, lower long-term value in the long run, very bad return behavior on the short run, things like that.
Operator
The next question is from Sheila Rathi, one for Beauty, one for Fashion. Any guidance on the number of stores for Beauty in FY 2024? And for Fashion, are there any headwinds you are witnessing in the Fashion business? Do we expect growth rates to pick up in financial year 2024?
Falguni Nayar — Managing Director and Chief Executive Officer
I think, on physical store, I’ll answer the question, we don’t plan to do more than 50 stores this year for the beauty business. So it will come off the base of 145 stores that we’ve ended the year at. And so that’s one guidance I can give. As far as Fashion is concerned, like Adwaita just said, that we are trying to pursue what we call as right growth. And I think the fashion industry is very large, like we always say that it’s 5 times the size of the beauty market. And there are a lot of brands and a lot of categories where the business is fraught [Phonetic] with high returns and high cancellations as well as high cost of, like marketing costs are very high.
So I think what Nykaa is doing is trying to work on a basis that we build a business that is long-term sustainable with the right cost structure. And within that, the mix of new and repeat customer issues drive the marketing costs. So, till such time as we are still like in terms of — you can see we started four years ago, but it’s been three years of significant performance. In which case, our ratio of new to repeat customers still is at 50-50 or slightly higher for new customer on Fashion, whereas for Beauty — I think on Beauty, also, I saw one question that are we acquiring enough customers? So I just wanted to say that while we don’t give out numbers of new customer acquisition for different segments, but we wanted to just say that in the year ended March ’23, we have actually acquired more customers in one year for Beauty compared to the previous two years. So, yes, we are accelerating our pace of customer acquisition in Beauty.
Operator
Next question is from Berima [Phonetic]. Could you please give us an update on the Middle East business? What is the business? How much investment do you envisage and time lines of the ramp-up?
Falguni Nayar — Managing Director and Chief Executive Officer
I think what we were thinking is that, like we’ve announced that we have a JV and we own 51% of the JV. And we are working towards a plan to roll out the business in the second half of this year. I think there should be some interesting — more detailed information on this business that will emerge, like as we do the planning and as we are working towards implementation. So, we are hoping that in our Annual Day later, this quarter or very soon after that, we will share more details of the GCC business, but it’s an excellent market, very large market, high per capita consumption of beauty, high per capital income, very concentrated market, physical retail will have a very large share to play. And as a result, we do believe that it can be a market where investments pay off much faster than many other markets.
So we think — I mean — and when we talk to our global brand partners, which Anchit talked about earlier, India and GCC tends to be their top priorities. And many of them are very keen to see Nykaa go into those markets and are supporting us in those markets. So, we do believe that with our strength in brand relationships, our strengths on technology and digital marketing and our partner strength in physical retail, getting the right locations in those markets, knowing those markets geographically, we have a win-win partnership that can help us execute well, but more details will come through over next one or two quarters.
Operator
Our next question is from Karan [Phonetic]. Can you comment on the forward outlook for growth for each of the segments? Will slowing inflation help accelerate growth as some other consumer companies have mentioned?
Falguni Nayar — Managing Director and Chief Executive Officer
Anchit, do you want to take first for Beauty?
Anchit Nayar — Chief Executive Officer, Beauty E-Commerce
Yeah. Sorry, I didn’t understand the question correctly. Can you just repeat that, please?
Falguni Nayar — Managing Director and Chief Executive Officer
Do you think the growth in beauty business will accelerate next year?
Anchit Nayar — Chief Executive Officer, Beauty E-Commerce
So, is that in relation to the inflation point? I didn’t understand the connection.
Falguni Nayar — Managing Director and Chief Executive Officer
Yes. But as the inflation slows down, I mean, was inflation taking away for first [Indecipherable] to a certain extent?
Anchit Nayar — Chief Executive Officer, Beauty E-Commerce
Yeah, I think, as I mentioned earlier, there was some inflationary pressures. And I think that has been commented on by some of the other publicly-listed FMCG companies. So there was a bit of inflationary pressure last year and certain price hikes that were taken and passed along to the consumer. So, we do see that trailing off this year, and we think that it should be less of an issue for our consumers. It wasn’t much of an issue for our premium consumers last year and it should become even less of an issue for this year. So, I think, yeah, we are quite optimistic that, that should help further fuel demand for both the online as well as the offline beauty business.
Falguni Nayar — Managing Director and Chief Executive Officer
And Adwaita, on the fashion side?
Adwaita Nayar — Executive Director
Yeah. So, I think, given our size and scale, the platform is not necessarily facing pressure in this regard. I think there’s enough room for us to grow quite comfortably without feeling necessarily the trends of inflation either way. So, I think the growth trajectory of fashion is a lot more dependent on the strategy we take in terms of how fast we want to grow and where and when we want to grow rather than external considerations.
And if I had to just give a little bit of direction, I think if we look on a year-on-year basis, that 47% GMV growth is definitely something we’d like to do again, and hopefully with some improvements in NSP. So somewhere around that is what we’d like to achieve. So we’re not giving up on growth at all. We’re not saying there’s going to be some super dramatic slowdown at all, it’s more just — this year has been a lot about identifying the pockets where one would like to grow.
Falguni Nayar — Managing Director and Chief Executive Officer
I think if I may comment on the fashion side, I think there could be certain growth drivers to assortment gaps that we may have in certain categories, like maybe denims, or maybe T-shirts, or maybe sarees and there will be continued expansion of assortment in such selective categories where we may be lagging behind what we need to have. But we are also extremely conscious to continue having this differentiated premium positioning in the market. And we don’t want to be cluttering our platform with a lot of low price affordable brands, which may give us quick conversion, but we do believe that it won’t allow the differentiation that we are keeping for the long-term.
So, we are not chasing the highest possible growth in fashion, but we are chasing the right growth that doesn’t dilute what the platform has to offer in terms of uniqueness. In fact, I think many of you may have read certain research, which was recently published. And what we want to do is, for those certain segment of the customers, which you know, Nykaa always try to approach customers from the top end of the consumption pyramid. For those, our fashion platform is differentiated and preferred platform. And that is the direction in which we are going, and Adwaita has described on our strategies right here.
So, I think within this, in fact we make an extra effort to make customers aware of new brands, aware of the more differentiated offerings, and through that build consumption on our platform rather than try to build revenue through going down the value chain. So I think we are very conscious to keep that appeal of the platform.
Adwaita Nayar — Executive Director
And I think just to add to that, I see a lot of questions coming through in terms of fashion growth. I think just to add one more lens to it. Really the priority is to break through from this 2.2%, 2.6% contribution margin that you guys have seen, and some of you asked that it’s been flat year-on-year. I definitely want to get back to a stronger place in the next couple of quarters before bringing the focus back to growth because I think being on this border line kind of cusp, and that to us is non-negotiable, right? Like our business is happy contribution margin positive. So that’s a non-negotiable, but definitely getting into a much more comfortable place in terms of unit economics and cost structure before. Again, further scaling up is the priority for all of us teams.
And so, like I said, shaping the business, renegotiating freight cost, fulfillment cost, working on a lot of these subline items, lot of emphasis on marketing, bringing that efficiency, bringing S&D down, so just systematically going after every line, getting this contribution margin to a better place and then scaling is probably what the next 12 months are going to look like.
Operator
Thank you. The next question is from Anand Shah [Phonetic]. Any guidance on capping of losses in other verticals? Will it go lower in absolute terms from here on? Are you done with investments here? Any guidance here will be helpful.
Falguni Nayar — Managing Director and Chief Executive Officer
I think we have said that we are hoping that for fashion, this was a year of peak loss. And from here, the fashion losses will be lower for the vertical. And we also share this unit economics just to show where that improvement will come, and we feel most of the improvement will come on marketing line as well as some improvement will come on the fulfillment expenses side. And also, this is a consolidated number, like I said, with the investment in new brands that we were launching is also built into this. And as that investment goes down again, you’ll see some improvement here. So that’s for the fashion.
For the other business, it’s a composition of a number of businesses. As far as eB2B is concerned, we do believe that the losses will not go up too much, but they may go up slightly in the coming year. But it will be quite affordable from our overall earnings on the EBITDA perspective — from the EBITDA perspective. We are keeping an eye on that. And we are controlling our rollout in B2B in a manner that doesn’t lead to swelling off costs.
I think we do believe that eB2B is a strategically important business, which will be very valuable in the long run. And it is something that we want to invest in, but very conscious of making sure that we do it right. And like fashion, it will first focus on being contribution positive, and after that it will focus on achieving scale, which will help us lower both the marketing and overheads of the business. But we are really controlling the overheads of the business quite tightly.
And marketing expense in that business comes in the form of selling and distribution expense. We’ve taken a call to serve through concentric circles of area as we service from our warehouses rather than going national. National will lead to much higher costs. And through that, we believe that we should be able to control our fulfillment costs in a way that we can make a difference to contribution profit for that business.
Operator
The next question is on fulfillment from Abi Mehta [Phonetic]. Would it be fair to expect per order BPC fulfillment costs seen in Q4 at INR85, also to be the new normal going forward on which we can see further productivity benefits?
Falguni Nayar — Managing Director and Chief Executive Officer
Anchit, do you want to answer that?
Anchit Nayar — Chief Executive Officer, Beauty E-Commerce
Yeah. So I think it is — if the question is, is the fulfillment cost on the BPC is sustainable — is that correct — at the current [Indecipherable]?
Operator
That’s correct. Yes.
Anchit Nayar — Chief Executive Officer, Beauty E-Commerce
Yeah, I think it is. I mean, for us, there has been some — a lot of focus on optimizing and bringing efficiency into that process. And as we spoke about earlier, we have regionalized our warehouse footprint, which has helped reduce the fulfillment costs, albeit there has been a capex investment on that front. But from a fulfillment cost perspective, it’s helped us reduce the cost per order. And so, I think that benefit should accrue in the coming years as well. And I think there is more efficiency for us to drive within that cost bucket as we continue to focus on that as an area of cost initiative for the BPC business, given our scale now.
Operator
A follow-up question. When do you expect the personalization Adtech engine to be up and running? And when can we see the benefit in marketing support revenues in BPC?
Anchit Nayar — Chief Executive Officer, Beauty E-Commerce
So, personalization is, it has been launched on the platform and we are testing it and piloting it. I think one must remember that personalization needs to be done in the right way. What I mean is that overpersonalization or hyperpersonalization too early on in India’s consumption journey is also not the right move because our whole goal is to increase the purchasing behavior of our consumers and to expose them to new types of products and new categories and thereby driving an increase in the average basket size, helping them to premiumize their purchases and also increase the frequency of purchase in a year, right?
So, I think those remain the key objectives. And so, personalization needs to be done keeping that in mind. And if you overpersonalize too early, then you are stifling the consumption journey that the Indian consumer is on. So, I think that is how we’re looking at it. So, we have the ability to personalize and we continue to improve and build out that capability. So, you will start to see benefits, I think, this year itself, but we will be doing it very cautiously. So that is to address the personalization point.
Falguni Nayar — Managing Director and Chief Executive Officer
I think if I may just add, what is not coming out in our conversation is the kind of CRM and CLM focus we have now, and we have a lot of information about our customers in terms of what they’re browsing, what they’re doing in terms of activities on the website or on the app and many things like that. And all of those are being used towards individual personalized journeys, and some examples you can see here in terms of mergers for complete — in completing the shopping or personalized replenishment nudges, or if they have tried to sample, then giving them [Indecipherable] to convert it to sales.
So, a lot of these are being used throughout the CLM, CRM journeys, and we are seeing big benefits of that. So if you see last year, we had a very strong growth in our repeat customers’ revenues also. So, I think, yeah, we can — somebody asked a question that, are we relying too much on that at the cost of new customers? We don’t see it like that. We see there are two different teams in our marketing, one, working on new customer acquisition and they have their own targets, and then the other is working on CRM, CLM journeys and they take all of the current customers and try to continue to make sure that, like Anchit said, they buy more frequently, they buy in larger amounts. And all of those — there were organic improvements in all of that, but we are also doing nudged improvements in all of that.
Anchit Nayar — Chief Executive Officer, Beauty E-Commerce
Yeah. I think, to address the second question on ad platform. So, to be clear, the ad platform is something which we are building to allow our brand partners, with the advertisers who advertise on our platform to be able to make real-time changes and to see data on the performance of their assets on a more real time basis. So it’s a lot more visibility to the brands, which should help them to see better return on investment.
Also, what it does is, a combination of personalization, and adtech allows us to actually increase the amount of advertising real estate, which we’re able to monetize. So, we are optimistic that, that should play out nicely this year. So we’ll see, but a lot of work has already gone into it, and this is the year of realization of both adtech and personalization.
Sunita Sachdev — Vice President, Investor Relations and Strategy
We do. This is Sunita Sachdev. We do have plenty of more questions here on the chatbox as well as on the Q&A, but we are definitely end for time. And therefore, we promise to respond to each one of these to you. And if there are any more questions, please feel free to contact us. But with that, we’d like to call the call to a close.
Falguni, would you like to have some closing remarks, please?
Falguni Nayar — Managing Director and Chief Executive Officer
Yeah. Thank you very much, everyone. I think we’ve had a good engagement from a number of you all who’ve been on the platform, and just really, really happy to be able to come in and talk to all of you. And like Sunita said, we really value your support and interest in the company, and feel free to get in touch with us so that if we can be of any help to clarify any further questions that you may have.
But with that, thank you very much.
Anchit Nayar — Chief Executive Officer, Beauty E-Commerce
Thank you.