Furniture etailer Urban Ladder posts profits amidst layoffs, shift to omnichannel play
Sequoia Capital backed furniture etailer Urban Ladder reported a net profit of Rs 50 crore for the financial year ended March 31, 2019, against a net loss of Rs 117 crore in the previous year. FY19 has been marked by a funds crunch, layoffs and a shift to an omnichannel strategy for the Bengaluru headquartered firm.
The company’s revenues from furniture sales grew 95% to Rs 298 crore during the year. Other income, which consists of non-core operations and investments, grew almost three times to Rs 135 crore.
Earlier the company received government approvals to operate as single brand retailer, which enabled it to set up offline stores in addition to online stores. Urban Ladder also derives revenues from commissions from its vendors on the online marketplace.
The company set up several offline stores in metro cities with six of them in Bengaluru and Delhi NCR. It had earlier said that physical stores contribute to nearly one-third of its total revenues.
Despite the turnaround in earnings, the company is facing a liquidity crunch. Its cash balance depleted to Rs 68 lakhs from Rs 12 crore, likely because of the offline store expansion. It also had high trade payables which stood at Rs 41 crore as of March 31.
Urban Ladder’s total expenses increased by 34% to Rs 382 crore during the year chiefly on account of a 66% increase in input costs to Rs 207 crore and a two-fold increase in finance costs to nearly Rs 5 crore.
However, the company managed to contain its operational costs which reduced to Rs 122 crore from Rs 134 crore a year ago. Employee costs too reduced to Rs 52 crore from Rs 55 crore. Earlier this year, the company laid off a number of people as part of a strategy to cut costs and turn profitable.
During the year, the company also saw a string of resignations from the top brass, notably co-founder Rajiv Srivastava and COO Ajit Joshi.
Apart from venture capital firm Sequoia, Urban Ladder, which competes with Pepperfry, counts hedge fund Steadview Capital, Tata Group chairman emeritus Ratan Tata and venture capital firms Kalaari Capital and SAIF Partners among its investors. As of January, it had raised $110 million via equity and debt. Last month, some of its existing investors pumped $2 million into the company.