Sugar Cosmetics, the direct-to-consumer (D2C) beauty brand, experienced a tempered growth of 20% in the fiscal year ending March 2024, following an impressive 90% surge in FY23. The brand successfully reduced its losses by 11.4%, signaling an effort to stabilize amidst a competitive market.
The company’s revenue from operations rose to Rs 505 crore in FY24, compared to Rs 420 crore in FY23, as per its financial statements filed with the Registrar of Companies (RoC). Sugar primarily generates income through the sale of cosmetics and beauty products, with export sales contributing Rs 2.5 crore. Additionally, it earned Rs 10 crore in interest income, bringing its total revenue to Rs 515 crore.
Advertising and promotional expenses remained Sugar’s largest expenditure category, unchanged from FY23, standing at Rs 162 crore. The cost of procuring materials increased by 21.1% to Rs 138 crore, reflecting the scaling of operations. Other operational costs—including employee benefits, rent, IT services, legal expenses, and packaging—contributed to a total expenditure of Rs 584 crore, marking a 15.6% rise from Rs 505 crore in FY23.
Despite the increased costs, the brand managed to reduce its losses to Rs 67.5 crore in FY24, down from Rs 76.2 crore in FY23. Sugar’s ROCE and EBITDA margins were recorded at -31.87% and -9.22%, respectively, with the company spending Rs 1.16 to earn a rupee in FY24. Its total current assets stood at Rs 302 crore, including Rs 54 crore in cash and bank balances.
Sugar Cosmetics has raised approximately $85 million to date, including a $50 million funding round led by L Catterton in 2022. Other prominent investors include A91 Partners and Elevation Capital. While Sugar was reportedly in discussions to secure $100 million at a valuation of $700-800 million during FY24, the deal did not materialize.
As the D2C sector faces challenges in achieving rapid topline growth, Sugar’s controlled losses are noteworthy. However, its slower revenue acceleration and consistent costs may present hurdles, particularly with the IPO landscape becoming more cautious. These factors, alongside intense market competition, underline the need for strategic innovations to ensure sustainable growth.