Strategy & Business

Review of FY2022

In fiscal 2022, the number of total buyers of "ZOZOTOWN" exceeded 11 million, and both gross merchandise value (up 8.4% year-on-year) and operating profit (up 13.6% year-on-year) reached record high. Meanwhile, efficiency measures contributed to cost reductions.Both logistics-related expenses and cargo handling charges decreased by 0.3 points as a percentage of the volume of merchandise handled from the same period of the previous year. The reduction in logistics-related expenses was due to improved work efficiency at logistics bases, while the decrease in cargo handling charges was due to the optimization of the size of cardboard and other materials used for product delivery,as well as higher shipping unit prices.In the "ZOZOTOWN" business, we achieved continuous growth by implementing measures to attract customers, and we continued to strengthen cooperation with Z Holdings regarding the "ZOZOTOWN Yahoo! JAPAN Shopping Shop."
We have also launched new initiatives as a fashion tech company, including a production support service “Made by ZOZO," that aims to eliminate inventory risk for fashion brands, the ultimate personalized-styling service “niaulab by ZOZO”, and the body management service “ZOZOFIT" in the U.S., a new business that utilizes the body shape measurement technology of the 3D measurement bodysuit “ZOZOSUIT”.
In addition, as a result of our expanded disclosure of information on ESG initiatives, we have received higher evaluations from ESG rating agencies and have been included in several indexes. We will continue to strengthen initiatives in environmental, social, and governance.

Future Investment Strategy

Our strategy "More Fashion × Better Fashion Tech - Explore your style. Make you delighted. -", we have set 3 pillars of the strategy to accelerate business growth starting in fiscal 2022.

In the first of the 3 pillars of the strategy, "Increase traffic from other than “BUY”,'" we opened ZOZO's first physical store, niaulab by ZOZO, in December 2022 as an initiative to "exploring and Interpreting 'your style'". The response from customers has been great, with over 20,000 applications received within 3 days of the launch, and the service has been well received ever since. We are currently offering the service free of charge, but in the future we would like to consider monetizing the service and opening multiple stores in response to demand. We believe that the pursuit of "your style" will further improve the accuracy of recommendations for users of "ZOZOTOWN" and the fashion / styling content app “WEAR," and the creation of various "your style" services, such as the horizontal expansion of the “your style” theory discovered in the future to overseas markets, will greatly impact our future growth.

In the second of the 3 pillars of the strategy, "Step into the “Production Support”," we launched a Production support service “Made by ZOZO (MbZ)" in September 2022. Since "MbZ" produces products after receiving orders, we were concerned about the longer time of about 10 days after customer’s order to shipping compared to regular delivery, but the response from customers has been positive. In some cases, the number of "MbZ" products sold was 1.5 times higher than that of regular products, and we will continue to aggressively increase the number of brands that use "MbZ" in their production.

In the third of the 3 pillars of the strategy, "Try ‘Technology Licensing Sales,’" we have been providing the body management service “ZOZOFIT" in the U.S. since August 2022, and we get the feeling that the 3D measurement bodysuit “ZOZOSUIT" is being well accepted by people who want to manage their body shape easily. We are planning to conduct promotions to encourage more people to use the service.
In addition, construction of "ZOZOBASE Tsukuba 3," our largest new logistics base, was completed in February 2023, with operations scheduled to begin in August, and full-scale operations scheduled to begin in November. ZOZOBASE Tsukuba 3" will be established in anticipation of future growth in the volume of merchandise handled, and will be the largest in scale in terms of total floor space, number of products stored, and other facility capacity within us. It will also be the first in Japan to introduce state-of-the-art equipment to promote automation and build efficient logistics operations, and is expected to reduce labor by approximately 30% compared to the existing base.

Improvement of capital efficiency

We believe that generating profits in excess of the capital cost leads to an increase in corporate value. Therefore, we use Return on Equity (ROE) as a management indicator and strive for highly capital-efficient management. Our goal is to maintain a minimum ROE of 30%, taking into account the level of global companies similar to ours. The ROE for FY2022 was 60.1% (62.5% in the same period of the previous fiscal year), which was the highest among the companies in the Nikkei 500 for the first time in three years, maintaining the high level from the previous year and far exceeding the target value.

Shareholder Return Policy

Our basic management policy is to strike a balance with retained earnings by comprehensively assessing trends in business performance, financial condition, and future business and investment plans. We also place emphasis on returning profits to shareholders, and will continue aiming for efficient management of capital with a target dividend payout ratio of 50%. We paid a shareholder dividend of 65 yen JPY share for FY2022. Going forward, we will continue aiming to increase corporate value with the aim of achieving both aggressive strategic investment and shareholder returns.

Realization of Corporate Philosophy

We will continue to strengthen our existing businesses and aggressively invest in new growth opportunities to become an infrastructure for the fashion industry, and by working to solve environmental and social issues, we aim to realize our corporate philosophy of "Inspire the world. Deliver joy every day."