News Update

Wakefit posts Rs 637 Cr revenue and 2.8X-increased losses for the FY22

• ByStartupStory     |    October 31, 2022

With a direct-to-consumer business model, Wakefit was one of the early movers in the sleep solution industry. Since its launch in 2016, the Sequoia Capital-backed mattress, pillow, and furniture brand has expanded quickly. Its scale during the previous four fiscal years, which increased by over 8X to Rs 633 crore in FY22 from Rs 73 crore in FY19, could potentially serve as evidence of its growth story.

According to Wakefit’s annual financial accounts filed with the Registrar of Companies, the company’s operational scale increased 54.8% to Rs 633 crore in FY22, maintaining its momentum (RoC). During the most recent fiscal year, sales of mattresses, pillows, and accessories accounted for 97% of the company’s overall operating revenue. In FY22, its revenue surged by 53.7% to Rs 613.16 crore.

During FY22, sales of services and scrap increased by 2X each, reaching Rs 9.2 crore and Rs 10.4 crore, respectively.The six-year-old business primarily uses the internet to create and sell furniture, pillows, accessories, and mattresses. Wakefit was recently valued at Rs 2,800 crore,and has so far raised Rs 450 crore.

The cost of materials turned out to be the main expense driver for the Bengaluru-based company in FY22, accounting for 51% of all costs. During the previous fiscal year, this expense increased by 54% to Rs 373.5 crore.

The second-largest cost centre, employee benefit expenses, increased by 58.6% to Rs 91.59 crore in FY22. The amount spent on advertising and the fee given to sole agents climbed by 42% and 127.6%, respectively, to Rs 61.21 crore and Rs 40.4 crore.

For transportation, distribution, and contract expenditures, the company paid Rs 58.12 crore and Rs 41.54 crore, respectively. This increased Wakefit’s overall expenditure in FY22 by 62.6% to Rs 738 crore.The company’s losses increased 2.8X to Rs 102 crore in FY22 from Rs 37 crore in FY21 as a result of higher expenses. The company’s cash outflows increased negatively and increased 2.3X to Rs 160 crore in FY22.

Wakefit has spent Rs 1.17 to earn a rupee on a per-unit basis. The company’s ROCE and EBITDA ratios declined to -29.38% and -14.36%, respectively, as a result of a substantial increase in losses.

Wakefit’s scale has increased over the previous four fiscal years, and the business has become the face of sleep solutions. The business is now placing a large wager on the furniture sector, where it expects to generate almost two-thirds of its sales in the coming years. Wakefit established a factory in Hosur (Bengaluru) with the capacity to produce 8,000 pieces of furniture (sofas, dining tables, and beds) every day in order to step up its game in this market.

Wakefit anticipates reaching the Rs 1,000 crore income mark in the current fiscal year (FY23), but it won’t be a simple ride. This is due to large ticket size furniture purchases. Experts monitoring the omnichannel furniture market claim that it is an operations-heavy sector with sizable offline components, in contrast to Wakefit’s approach, which mainly relied on internet channels.

In addition to Duroflex, which reported operating revenue of Rs. 893 crore in FY22, Wakefit also faces competition from SleepyCat and Sleep Company. It competes with Pepperfry, IKEA, and Woodenstreet, but with a stronger emphasis on furniture.

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