Amid declining profit and falling share price, top executives at Nykaa, including Gopal Asthana, Chief Business Officer of the fashion division; Chief Commercial Operations Officer Manoj Gandhi; and Chief Executive Officer of wholesale business Vikas Gupta, have resigned.

A company spokesperson confirmed the exits and said it may have happened as part of the annual appraisal process.

“Voluntary and involuntary exits are expected in a fast-paced, growth-focused, consumer tech organisation with over 3,000 on-roll employees, like Nykaa. Over the years, Nykaa has acted as an incubator to bring together and support some of the most promising talent India has to offer. We see some of these mid-level exits as a part of the standard annual appraisal and transition process, wherein, people exit due to performance or to pursue other opportunities. Nykaa values the contributions of all its current and former employees and stays connected through a strong employee alumni network,” said a Nykaa spokesperson.

In February, FSN E-Commerce Ventures, the parent company of Nykaa, reported a 71 per cent fall in consolidated net profit to ₹8 crore for the quarter ended December 2022. It was ₹29 crore in the same quarter of last year.

Profitability concerns

Recently, brokerage firm Macquarie has said it remains concerned about Nykaa’s ability to profitably grow in the fashion segment, where the company offers a curated marketplace of third-party/newly-developed own apparel brands. “An analysis of offline retailers indicates that players using a curation-led approach with third-party brands have seen limited success,” the brokerage firm said in a report.

“With larger D2C brands increasingly looking to move offline and customers demanding more physical stores to experience products, we believe Nykaa would need to reinvest gains to sustain growth,” it said and added, “The need may be exacerbated by the entry of new players like Reliance Retail and Tata Cliq.”