Online fashion retailer Koovs.com has reported gross sales of Rs 162 crores (£18.6m) for the full year ended 31st March 2017, up 87% year on year from Rs 98.1 crores in the previous financial year. Note that this refers to sales only, including returns. For the previous financial year, of the Rs 98.1 crores in gross sales, net sales were Rs 68.7 crores, according to its annual report (pg 4): that means in FY16, returns were 29.78% of gross sales.
Gross sales do not represent the revenues that the company made, which it hasn’t disclosed yet. Revenues for previous financial year FY16 were Rs 51.24 crores, its loss then was Rs 165.04 crores. There’s no such data available for FY17, so we’ll share more details once Koovs releases its annual report. What we do have, is data for the six month period ended 30th September 2016, as per which, Koovs had reported revenues of Rs 36.6 crores, and a loss before tax of Rs 83.5 crores.
Koovs said it “continued to improve its gross margin position by improving intake margin and controlling the level of discounts given, and expects to generate positive gross margins in FY18.”
The company says that units shipped increased and repeat customers increased 100% year on year, but hasn’t shared absolute numbers.
Private Label accounts for 40% of sales
Koovs recently said that it will launch products from its Koovs Private Label Collection on SOUQ.com, a middle east ecommerce major.It’s also looking at the Asia Pacific as a target market. Note that Amazon has recently reached an agreement to acquire Souq.com. The Private Label Collection currently accounts for 40% of Koovs sales. This includes designer collaborations with Manish Arora, Hattie Stewart, Gauri & Nainika and Masaba. New collaborations planned for spring include those “from Disney and the Princess Collection with Daniella Helayel.”
The company now has 1.8 million registered users, up 80% year on year, although registered users aren’t representative of active users. For the first half of the year H1 FY17, Koovs had reported an active customer base of 431,00. Koovs says it has 2 million followers on social media.
Ads for Equity Relationships with both HT Media and Times of India
Koovs has an ads for equity deal with HT Media. In Q2 last year, HT Media was asked about why it doesn’t sell its stake in Koovs, given that, at that time, the stock was up 2.5x of investment. In response, Sandeep Jain, Chief Strategy Officer of HT Media had said that this “may happen”. “I am not so sure if it is going to happen in one chunk, but gradually over a period of time I am sure that there would be opportunities to sell some part of the stock and we would do that. We also have to understand that we have a sizeable holding in Koovs and we cannot be selling the entire stock in the market in one go. We would certainly start selling some of this stock in the coming quarter.” We haven’t heard of any sale of shares since. A filing in February points out that HT Media’s holding is down from 8.2% to 6.8%, but that is owing to an increase in the share capital of Koovs.
In November 2016, Koovs also issued shares to Brand Equity Treaties Limited, amounting to 4.39% in the company. This was due to a funding of £3.9 million from The Times of India Group, apparently another ads for equity deal, which gave Koovs “access to multiple channels nationally across TV, print, radio, outdoor, online and digital.”
Koovs said that “This was a significant move and caused short-term cash liquidity issues, including for e-commerce companies, as cash on delivery is standard practice in the Indian market.” In December 2016, it had said that “The management’s rapid response to offer flexible customer payment options, including door step conversion to card and e-wallet payments, and an increased focus on highly targeted marketing promotions, has resulted in a shift to 50% digital payments (from 30%), strong YoY growth in November 2016 and one of our best sales days ever during December.” Some indication of how cash on delivery impacted operations is here.