In this article, we will explain Sugar Cosmetics revenue structure and the probable reasons that led to its substantial losses.
The D2C (Direct-to-Consumer) beauty firms are booming at an exponential rate in India. Reason? Due to technological innovations, upgradation of consumer lifestyle as well as awareness. All these reasons are contributing to the makeover of the Indian beauty and personal care market. When it comes to D2C brands in the beauty segment, the names that float on top are Nykaa, Sugar Cosmetics, MamaEarth, etc. These brands are mushrooming through an omni-channel strategy. Do you know, Sugar Cosmetics revenue leaped by 75.6% to Rs.222 crore? However, this enormous revenue couldn’t confer profits to the company! Its losses crashed by 3.6 times to Rs.76.2 crore. Why did it make a loss despite making enormous revenue? You may ask. Go through the write-up and you will get the answer to your question.
Sugar Cosmetics Revenue breakdown
First of all, let’s look at the bright side of the company. In FY22, Sugar Cosmetics earned revenue of Rs.222 crore. Do you know how much it earned last year (FY21)? Rs.126.4 crore. It is time to compare the Sugar Cosmetics revenue of the last two fiscal years.
|Sugar Cosmetics Revenue Sources||FY 22 (Financial Year 2022)||FY21 (Financial Year 2021)|
|Sale of Cosmetic and Beauty Products||Rs.221.8 crore||Rs.126.34 crore|
|Export Incentives||Rs.0.03 crore||Rs.0.02 crore|
The revenue of the company increased in every fiscal year. It is quite fascinating! Isn’t it? But there is an intense dark side to this scenario. Expenses! You will get to know about it in the next section.
Sugar Cosmetics Expenses Breakdown
Although Sugar Cosmetics went through a golden phase of gradual growth in revenue. In FY 22, the total revenue was massive i.e. Rs.222 crore. But they couldn’t celebrate it as they should! Why? You may ask. Because of its ballooning losses. Now look at the following expenses that led to the losses for the company “Sugar Cosmetics.”
|Expenses||FY 22 (Financial Year 2022)||FY21 (Financial Year 2021)|
|Cost of raw goods||Rs.66.35 crore||Rs.40.75 crore|
|Marketing & Promotion Expenses||Rs.97.4 crore||Rs.34.36 crore|
|Outsourced Support Services & Labour Charges||Rs.43.61 crore||Rs.22 crore|
|Freight and Packaging Charges||Rs.13.25 crore||Rs.8.8 crore|
|Employee Benefit Expenses||Rs.35.52 crore||Rs.19.2 crore|
|Other Operating and Admin Expenses||Rs.43.73 crore||Rs.23.9 crore|
Now, you might have understood why Sugar Cosmetics is drowning in deep losses in spite of earning a massive revenue. However, as per the company, it sees its expenses as potent investments that will contribute to a significant amount of revenue in the future.
Financials of Sugar Cosmetics
The financials of the company Sugar Cosmetics is summarized in the following table-
|Sugar Cosmetics’ Financials||Amount (in crores)|
|Market Valuation||Rs.4,133 crore|
|Revenue Earned||Rs.222 crore|
|Profit/Loss||Loss of Rs.76.2 crore|
So, here is your answer- “Sugar Cosmetics was not profitable in FY22 because it dipped in the loss of Rs.76.2 crore.” Even though it earned an appreciable amount of revenue from its numerous revenue sources. But the cash outflow in various expenses was high as well. This means the amount spent on expenditures exceeded the amount of revenue earned. Eventually, it continues to face a significant amount of loss i.e.3.6X.
Future Plans of Sugar Cosmetics
As per the CEO Vineeta Singh, Sugar cosmetics is planning to expand its network all over India. Especially in the South Indian market. Aren’t you curious to know why they are focusing on the beauty market of the southern part of India? Because, it is getting over 24% of business from the south. This feature distinguishes Sugar Cosmetics from other companies of the beauty segment that are focusing on North India. Also, Sugar Cosmetics emerged as a popular brand of Gen-Z and millennials. Thus, the company is looking to spread across 550 cities in the country by making significant investments.