Nykaa Partners with Apparel Group to Penetrate Gulf Markets; sees it as a multi-year growth opportunity
Mumbai: Nykaa, the Indian fashion and cosmetics retailer, has teamed up with Middle East-based fashion and lifestyle giant Apparel Group. With this strategic alliance, the former aims to utilize the latter’s strong retail infrastructure network and deep market relationships to recreate its beauty retail platform and create beauty offerings. distinct Gulf Cooperation Council (GCC)-focused programs in the United Arab Emirates, the Kingdom of Saudi Arabia (KSA) and Qatar. , Oman, Kuwait and Bahrain.
The joint venture will create an omni-channel, multi-distribution brand for the Middle East, with Nykaa owning a 55% stake in the new entity and the remaining 45% will be owned by Apparel Group.
According to reports, Nykaa CEO Falguni Nayyar believes that the per capita consumption of beauty products is very high in the GCC region, and the company sees it as a multi-year growth opportunity.
According to Elara Capital’s Senior VP – Media, Consumer Discretionary and Internet Research Analyst, Karan Taurani’s margins in the GCC market are well above those in India (gross margin of around 48 at 50%). Nykaa’s contribution to Private Label Gross Merchandise Value (GMV) is currently 11.2%, which could lead to a 10-15% increase in sales volume for this segment in the near term due to expansion of the new market, he points out.
“According to our assessment, this joint venture will thus have a positive impact of 1 to 2% on the growth rates of the global beauty and personal care (BPC) segment; this may initially have a dilutive effect on margins due to investment in the overseas market (creating brand awareness), but will have a positive impact on profits, once they reach scale,” says Taurani.
Elara Capital has estimated a 23.7% compound annual revenue growth (CAGR) for the Nykaa BPC segment in the coming years, it adds.
For the record, Nykaa has 112 retail stores in India (as of June 30), offering around 28,000 PINs and offering over 4,500 brands across all platforms. Apparel Group is a global fashion and lifestyle retail conglomerate headquartered in the United Arab Emirates (UAE). It is home to over 75 lifestyle and beauty brands with over 2,000 stores in 14 countries.