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Pepperfry’s growth woes continue in FY24, losses drop 37.5%

Entrackr · 5m ago

Medial

Omnichannel furniture brand Pepperfry continues to face growth challenges, marking its second consecutive fiscal year of revenue decline. After a 10% drop in FY23, the Mumbai-based company saw a 30% year-on-year decline in operating revenue in FY24. Pepperfry’s revenue from operations declined to Rs 189 crore in FY24, down from Rs 272 crore in FY23, according to its consolidated financial statement filed with the Registrar of Companies (RoC). Pepperfry primarily earns revenue from marketplace services and product sales. In FY24, revenue from services contributed Rs 169 crore, though it declined 29.9% year-on-year. Meanwhile, income from product sales saw a sharper drop of 50.7%, falling to Rs 15 crore. Other income, including miscellaneous sources, contributed Rs 5 crore in FY24. The company earned an additional Rs 20 crore from interest income, bringing its total income to Rs 209 crore in FY24. On the expenditure side, Pepperfry optimized its costs, resulting in a 31% reduction in total expenses, which fell to Rs 327 crore in FY24. Pepperfry significantly reduced its expenses across multiple categories in FY24. Employee benefit expenses declined by 29.7%, standing at Rs 60.5 crore, while advertising costs were cut by 44.3% to Rs 59 crore. Similarly, transportation expenses dropped 27.8% to Rs 28.5 crore, and the cost of materials saw the sharpest decline, shrinking by 65.8% to Rs 6.5 crore. Additionally, depreciation and amortization expenses decreased by 17.7%, totaling Rs 51 crore for the year. Due to controlled expenses, Pepperfry managed to reduce its losses by 37.5% to Rs 117 crore in FY24 from Rs 188 crore in FY23. Its ROCE and EBITDA Margin stood at -57.94% and -20.79%, respectively. On a unit level, Pepperfry spent Rs 1.73 to earn a rupee of revenue in FY24. The Mumbai-based firm had current assets worth Rs 141 crore in FY24 including Rs 78 crore in cash and bank balance. According to TheKredible, Pepperfry has raised more than $230 million in funding, having Norwest Venture, General Electric, Goldman Sachs and State Street Investments as its lead investors. The firm recently elevated Madhusudan Bihani to the role of chief financial officer (CFO). Pepperfry’s struggles have been well documented, and there certainly doesn’t seem to be any end in sight. The firm has done enough course corrections to come a full circle in some ways, and a breakout looks increasingly difficult. While it must be galling for the firm to see later entrants like Wooden Street do well, one feels it is trapped in its own ideas where it had the conviction to start, but is running out of reasons to consider giving up. It’s not as uncommon as one would imagine, and making the course corrections yet again is a lot more difficult than it seems from the outside. But again, speaking from outside, we believe the marketplace model has very limited utility, and we simply cannot see how it can be a solution to Pepperfry’s journey to become a sustainable business.