ZOZO Q1 FY2027: Revenue up 3.9%, op profit rises 5.7%, announces ¥30bn buyback

ZOZO's first quarter saw both sales and profit expand, driven by its flagship ZOZOTOWN platform. Revenue reached ¥56,132 million (up 3.9% year on year), while merchandise transaction value excluding other items grew 5.1% to ¥156,694 million. Despite a rise in cost of goods sold, an improved SG&A ratio lifted operating profit to ¥17,883 million (up 5.7% ) and ordinary profit to ¥17,866 million (up 7.4% ). Net profit attributable to owners of the parent came to ¥11,895 million (up 4.6% ). Adjusted EBITA, defined as operating profit plus goodwill amortization and M&A-related costs, was ¥18,746 million (up 3.6% ), with a margin of 12.0% against merchandise transaction value, a slight decline of 0.1 percentage points.

Growth was supported by stepped-up marketing. TV commercials and web ads around the "ZOZOWEEK" event and summer sale pushed annual active buyers to 13.41 million. LYST posted a 33.3% surge in transaction value, helped by a longer consolidation period and overseas demand, while LINE Yahoo Commerce rose 7.6% . Revenue growth trailed transaction value growth, however, reflecting more aggressive discounting, loyalty-point promotions, and a higher mix of LYST’s lower-fee business.

The group operates as a single e-commerce segment but discloses results by business line. First-quarter figures are shown in the table below (with English translations provided).

ZOZOTOWN: Consignment sales posted transaction value of ¥120,384 million (up 3.6% ) and fee revenue of ¥33,225 million (up 3.0% ). Used-item sales grew 10.0% to ¥5,059 million in transaction value. In-house purchasing/manufacturing shrank 32.1% to ¥566 million as the company scales back that activity. Shop count rose to 1,714 and brand count to 11,548, with new store openings such as "KEY TIMEZ" and "JFA STORE". Annual buyer numbers hit a record 13,415,786, but the average item price fell 1.7% to ¥3,682 and the average annual spend per buyer declined 4.6% to ¥40,900, reflecting a heavier mix of first-time buyers and a higher frequency of sales.

LINE Yahoo Commerce: Transaction value climbed 7.6% to ¥18,952 million, and revenue rose 8.9% to ¥5,877 million, aided by campaigns like "Honki no ZOZO Matsuri".

LYST: Transaction value surged 33.3% to ¥10,083 million, and revenue jumped 36.4% to ¥1,388 million, underscoring its growing overseas contribution.

B2B Business: Revenue fell 28.8% to ¥266 million as large-scale deals declined.

Advertising Business: Revenue edged up 2.4% to ¥2,976 million, leveraging the user bases of ZOZOTOWN and WEAR.

Other: Revenue, which includes shipping fees, payment charges, and now High Link’s non-online sales (such as the Calaria subscription), was ¥6,921 million (up 1.1% ).

Total assets fell 9.8% from the end of the previous fiscal year to ¥178,869 million, mainly due to a ¥32.2 billion decline in cash and deposits from share repurchases. Current assets shrank to ¥105,640 million. Fixed assets rose to ¥73,229 million, lifted by ¥4,197 million in goodwill booked from the High Link acquisition. Liabilities decreased 12.3% to ¥80,258 million, helped by lower customer deposit guarantees and income-tax payments. Net assets declined 7.7% to ¥98,610 million: profit added ¥11,895 million, but this was offset by dividend payments of ¥17,686 million and share repurchases of ¥2,841 million. The equity ratio improved to 55.1% from 53.9% at the previous year-end.

On June 16, 2026, the board resolved a ¥30 billion share buyback (up to 43 million shares), consistent with the company’s target of a total payout ratio above 80% over a five-year average. In the first quarter, ¥2,528.3 million worth of shares were acquired; all repurchased shares are to be retired in January 2027. The full-year dividend is maintained at ¥40 per share (¥20 interim, ¥20 year-end).

Key risk factors highlighted in the earnings report include:

• The Japanese fashion market faces uncertainty from persistent inflation, climate change, and geopolitical tensions. Thriftier consumer sentiment could dampen demand for high-ticket items.
• While annual buyer numbers grew, the rising proportion of new members is reducing average purchase amounts and units per buyer. Improving the spend of new buyers is an urgent task.
• The average item price fell 1.7% year on year. If heavy discounting becomes normalized, gross margins face persistent downward pressure.
• ZOZOTOWN still accounts for the bulk of business, exposing the company to intense e-commerce competition from Amazon and brands’ own direct channels.
• LYST’s growth depends heavily on overseas demand, making it vulnerable to adverse currency moves (a stronger yen). There is also a risk that monetization of High Link (Calaria) and synergy realization may fall behind schedule.

To address these issues, ZOZO is using the AI-powered styling assistant “Lab-kun” to attract new traffic and diversifying into adjacent areas such as fragrance.

The full-year forecast for FY2027, unchanged from the April 30, 2026 announcement, calls for revenue of ¥241,900 million (up 5.9% year on year), operating profit of ¥74,400 million (up 7.3% ), adjusted EBITA of ¥77,900 million (up 7.2% ), and net profit of ¥49,700 million (up 3.7% ). First-quarter progress stands at roughly 23% on revenue and 24% on operating profit, indicating a solid start.

(Units: ¥ million; FY2026 is the year ended March 2026.)

While detailed assumptions such as foreign-exchange rates were not disclosed, the forecast factors in continued growth at LYST, ZOZOTOWN’s customer-acquisition strength, and the impact of the buyback. Gross-margin risks and competitive dynamics warrant close watching.

Calaria, a comprehensive fragrance platform operated by High Link, became a wholly owned subsidiary in April 2026 for an acquisition price of ¥4,950 million. Consolidation began in May 2026. Goodwill of ¥4,632 million (amortized evenly over seven years) was provisionally recorded. The aim is to drive traffic from ZOZOTOWN’s existing customer base and leverage subscription-service know-how, expanding into the fragrance market, which has strong affinity with fashion.

The ¥30 billion buyback embodies the shareholder-return policy of a five-year average total payout ratio above 80% and follows a pattern of large repurchases in recent years. It represents 4.86% of outstanding shares. First-quarter EPS was ¥13.45, up from ¥12.79 a year earlier, and further accretion is expected as the buyback progresses.

In digital initiatives, ZOZOTOWN opened the LINE official account “ZOZO’s Outfit AI Lab-kun” in April, using AI to suggest outfit coordinations from a vast fashion database. Whether such digital touchpoints will improve key customer metrics is a focal point for coming quarters.