ZOZO,Inc. Q4 FY2025 earnings call

Highlights of FY25: GMB and EBITDA reached new all-time highs. Acquired all shares of Highland, to be consolidated starting in May 2026. SG&A ratio decreased due to certain SG&A items not occurring or being minimal on a standalone basis. ZOZOTOWN continued to acquire new members and had positive results from re-engagement initiatives. Adopted adjusted EBITDA from FY26, excluding impact of certain M&A-related items. Medium-term business plan for FY29 ending March 2030, focusing on near fashion, more fashion, and global domains. Initiatives in developing fashion-specific AI agent, expanding near fashion domain through partnerships and in-house creation, and growing global domain with Zozo Fit. Internal AI use progressing, geopolitical risk impact analyzed, and progress on SDGs.

GMB including other increased by 8.4% year-on-year to 666 billion yen. Total GMV for Zillowdown Business Line, EFM Commerce, and B2B Business combined increased by 5.1% year-over-year to 600 billion yen. LISP fell short of its target. EBITDA increased by approximately 7.14 billion yen from 69.78 billion yen in the previous year to 76.92 billion yen in the current fiscal year. SG&A ratio relative to GND was 22.2%, a decrease of 1 percentage point compared to the same period last year. In Q4, actual promotion expenses amounted to 5.5% of GMV. ZOZOTOWN's total buyers increased by 360,000 from the previous quarter to 13.17 million; active members increased by 308,000 to 12.47 million; guest buyers decreased by 4,000 to 609,000. Number of shops on ZOZOTOWN at the end of the 4th quarter was 1,710. Average retail price came to 3,974 yen, a 1.6% year-on-year decrease. Average order value stood at 8,864 yen, a 1.3% year-on-year decrease.

FY26 total GNV is expected to increase by 2.0% year-over-year to 679.6 billion. GNV, excluding other GNV, are expected to increase by 5.0% year-over-year to 608.6 billion yen. Net sales is expected to increase by 5.9% year-on-year to 241.9 billion yen. OPI is expected to increase by 7.3% to 74.2 billion, and the OPI margin, 11.0%. Adjusted EBITDA is expected to increase by 7.2% year-over-year to 77.9 billion yen, and adjusted EBITDA margin is expected to be 11.5%. ZOZOTOWN to aim for sustained growth by increasing buyers. Yahoo Commerce expected to grow driven by new member acquisitions. LISP expected to have approximately 10% growth. Advertising business projected slight year-over-year increase. Logistics plan for DPL and Zozobase Notational 3.

Geopolitical risks: Impact on items supplied by brands expected in fall, indirect materials like packaging may have cost impact, but limited for FY26.