Three points you will get to know in this article:
- Ferns N Petals saw modest income growth but faced significant losses.
- Revenue comes from cakes, flowers, gifts, diversifying into hospitality and culinary.
- Despite setbacks, Ferns N Petals commits to addressing challenges for resilience.
The thriving gift-giving hub, Ferns N Petals, experienced rapid expansion over the recent financial periods. However, the company hit a growth plateau in FY23. During the last fiscal year, the Delhi-based enterprise saw a modest 4.8% uptick in its income but faced a substantial setback, recording significant losses amounting to nearly Rs 110 crore in FY23.
According to the consolidated financial statements submitted to the Registrar of Companies, the firm’s revenue from operations rose to Rs 607 crore in FY23 from Rs 579 crore in FY22. Despite the growth hiccup, Ferns N Petals remains a noteworthy player in the gifting industry, navigating both successes and challenges with resilience.
Revenue Streams and Market Presence
The team generates revenue by offering delectable cakes, beautiful flowers, and personalized gifting solutions, together accounting for 92% of its overall operational earnings. These delightful products are available for purchase on the company’s official websites, various third-party e-commerce platforms, and brick-and-mortar stores. Currently, the enterprise boasts a presence in over 125 cities across India, operating more than 400 franchise outlets.
The remaining portion of the income stream is derived from charges related to delivery, convenience, as well as packing and forwarding services, all graciously borne by our valued customers. Ferns N Petals has also been successfully managing a hospitality venture through Udman Hotels for over six years. In a recent announcement, the company revealed plans to enhance its hospitality portfolio by introducing 50 new hotels. However, specific revenue details from this expansion were not disclosed by the company.
This multifaceted approach allows us to not only indulge our customers with delightful treats but also provide them with seamless services, making their experience truly special.
Cost Structures and Financial Challenges
On the gifting solutions platform, the predominant cost factor revolves around the procurement of materials, constituting a significant 38% of the overall expenses. This expenditure experienced a modest uptick of only 2.2%, reaching Rs 278 crore in FY23 compared to Rs 272 crore in FY22. Meanwhile, the costs associated with employee benefits witnessed a more substantial growth of 13%, totaling Rs 121 crore in FY23.
In contrast, the firm saw a 25% surge in its total expenditure in FY23, soaring to Rs 723 crore from the previous year’s Rs 578 crore. This increase can be attributed to various factors, including expenditures on advertising and marketing, legal services, freight, and information technology.
Operational and Financial Setbacks
In the fiscal year 2023, Ferns N Petals faced a challenging financial scenario marked by a stagnant revenue and a significant 25% increase in overall costs. This unfortunate combination ultimately led to the company incurring losses. Specifically, the annual report revealed a staggering Rs 109 crore deficit, a sharp contrast to the Rs 10 crore profit recorded in the preceding fiscal year, FY22.
The Return on Capital Employed (ROCE) and EBITDA margin further deteriorated, reaching -81.2% and -14.9%, respectively. This downturn in financial metrics indicates the substantial challenges faced by Ferns N Petals during the period. On a more granular level, the company spent Rs 1.19 to earn a single rupee in FY23, underscoring the intricacies and difficulties encountered at the operational level.
Strategic Business Ventures
Despite these financial setbacks, Ferns N Petals remains committed to addressing these challenges head-on and implementing strategic measures for a more resilient and prosperous future.
In the preceding month, Ferns N Petals revealed its foray into the culinary realm with the introduction of The U Kitchen. This novel venture seeks to delight patrons with a diverse array of culinary offerings, spanning European, Asian, Korean, Japanese, Continental, French, and Indian street food, along with a rich selection of regional Indian dishes.
From its modest origins as a sought-after florist, Ferns and Petals has consistently defied expectations through its strategic expansions. While the transition into confectionery, notably cakes, appeared logical, recent developments have raised eyebrows. Regrettably, the company seems to have relinquished its position as the unequivocal leader in its category, opting to pursue slices of ostensibly swifter-growing market segments. Caught in the snare of the ‘growth imperative,’ Ferns and Petals, akin to its meticulously crafted bouquets of yore, must now exercise astute judgment in selecting its new ventures—an imperative task, one might say.
While Ferns N Petals experienced modest income growth in FY23, it faced significant losses amounting to nearly Rs 110 crore. The company’s revenue rose to Rs 607 crore, with a majority of earnings from cakes, flowers, and personalized gifts. Operational costs surged, leading to a 25% increase in total expenditure. This resulted in a staggering Rs 109 crore deficit and deteriorated ROCE and EBITDA margin. Despite these setbacks, the company remains committed to addressing challenges, evidenced by its foray into the culinary realm with The U Kitchen. Ferns N Petals faces the imperative task of astutely selecting future ventures.
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