Kids-focused omnichannel retailer FirstCry has posted around 50% growth in its scale in the fiscal year ending March 2022 but at the same time, it has slipped into losses due to an increase in expenses across verticals.
FirstCry’s operating revenue grew 49.8% to Rs 2,401 crore in FY22 from Rs 1,603 crore in FY21, according to its consolidated financial statements filed with the Registrar of Companies (RoC).
The company offers a wide range of products for babies, kids, and mothers through online and physical stores. Income from the sale of products accounted for 96.8% of the total operating revenue. This collection surged 49% to Rs 2,323 crore in FY22.
Brands also advertise on FirstCry’s website, and revenue from this vertical grew 53.7% to Rs 63 crore in FY22 from Rs 41 crore in FY21. The company also generated other income in the form of interest on fixed and current investments, which shrank 15.3% to Rs 116 crore during FY22.
Moving to the expense sheet, the cost of materials was the largest cost center, which formed 61.2% of the overall expenditure. In proportion with growth in scale, this cost, too, rose 50.3% to Rs 1,572 crore in FY22 from Rs 1,046 crore in FY21.
Similarly, employee cost for the 13-year-old company also jumped 58.4% to Rs 339 crore in FY22. This includes Rs 92.1 crore as ESOP cost which is non-cash in nature. Spending on advertisement grew 64% to Rs 269 crore, whereas courier expenses rose 60.5% to Rs 61 crore in the said period.
The company added another Rs 51 crore as subcontractor cost, which pushed FirstCry’s total expenditure to Rs 2,568 crore, up by 56.1% from Rs 1,645 crore in FY21.
Even as expenses outpaced revenue growth numbers, FirstCry slipped into losses in FY22. It recorded a loss of Rs 79 crore during this period, whereas the figures were in green (profitable) at Rs 216 crore in FY21.
Its ROCE and EBITDA margin also worsened to -0.25% and 3.89% respectively. On a unit level, it spent Rs 1.07 to earn a rupee in FY22.
With the firm holding costs steady without ESOP costs, FirstCry is well poised to build on its leadership in its chosen segment, especially with cheap money drying up for many potential competitors. The battle-scarred firm has seen enough ups and downs to be able to make the best of the opportunity that presents itself now. Expect major new announcements from its corner in due course.