2025 ending March 2026. CEO Sawada and CFO Yanagisawa will continue to participate, and Director CEO Fumihiko Ikuse and General Manager of Corporate Planning Office Yusaku Suzuki will be joining to respond to your questions. There will be four presenters. The session will last until 6:20. If you have questions, please raise your hand with a button at the bottom. When you're appointed, please unmute. State your company name and your name, and then ask your question.
Terai-san, thank you. Go ahead. Hello.
This is Terai from JP Morgan. I have two questions. Both are about your midterm plan. What you disclosed today mentioned that you're going to focus on Near Fashion, More Fashion, and Global Domain. May I have the breakdown of the EBITDA for FY 2024? Near and More?
Sure. I'd like to answer that. I will not be able to disclose the numbers around it, but those are for Near Fashion and Global Domain. We do not expect to experience significant impact of Near Fashion and Global Domain in FY 2026. You aim to do 80 billion in FY 2029. I don't think that the More Fashion is going to grow that much compared to how much you're doing now. Is it correct for me to understand that you're going to pivot more into More Fashion and Global Domain? For More Fashion, we are not expecting to have double-digit growth in More Fashion domain. At the same time, we don't think that we're going to decrease that much of our GMV. Please understand that we have given it some leeway there.
What it means is that if Near and Global are going to do well, overall, our number is going to be quite strong.
I wanted to ask an additional question about the Global Domain. You plan to do a JPY 5 billion EBITDA. Are you saying that you're confident with the sophistication of the service that you provide because of the technological advancement you have so far?
For Global Domain, it's really about it's really dependent on how Lyst does. As Yanagisawa explained, they're still in a very important investment phase. From the next fiscal year, we want to complete the structural reform and so that we can be growing in the next fiscal year. It doesn't mean that that will be all of the Global business. There could be there is ZOZOSUIT, and then there might be another M&A in the Global Domain.
Great. Thank you for your detailed explanation. That's all from me.
Thank you very much, Terai-san. Let's move on to Nabeshima-san.
Sorry, there's been some trouble with the sound. Did you hear me? He said. No? We can hear you. Good, good. I do have two questions myself. First of all, this is about this year's guidance. It seems like the profit is only going to grow by 3.7%, even though your GMV growth is 7%. May I ask why you came up with this guide having relatively lower profit growth?
I'd like to explain that. There was increase of salary, and then we were able to also have preferential tax treatment that we were able to have this fiscal year. That's why there is a difference of the growth rate between adjusted EBITDA and this year's EBITDA.
Okay, got it. Overlapping with what Terai-san asked. There's adjusted EBITDA. For adjusted EBITDA, you said that you did JPY 76 billion, and it's going to be JPY 77.9 billion. For the fiscal year that just ended, for Near Fashion, and Global Domain, I thought that the Global was still in the loss. In the JPY 72.6 billion you did this fiscal year, was that in profit or was that a loss or a receipt? You expect this to go up from JPY 72.6 billion-JPY 77.9 billion. Are you expecting to see improvement also in Global Domain as well?
Thank you for your question. Yamanishi-san will explain that.
Sure. For this fiscal year. I am frozen, but I think you can still hear me. For Global Domain, it's still in the loss. For Near Fashion, we don't have anything yet. Like, there's zero. It's zero, basically. It's no.
Okay. When you say this year, are you talking about the previous fiscal year or this current fiscal year? I'm talking about the previous fiscal year. For FY 2026, what is your direction?
Right. For FY 2026, for the Near Fashion Domain, there had been an M&A already. By consolidating this acquired company, we believe that we can be in a very small amount of profit. During the period, if there is another M&A or if there was an establishment of a new business, we might be in a bigger profit. We also see that we're still in investment phase for Global Domain, so we expect to be in a slight loss for Global Domain.
All right. Makes sense. Thank you. That's all. Terai-san, thank you very much for your question. Moving on to Nagaoka-san. Go ahead with your question.
Hello, analyst with Bank of America, Nagaoka here. I just wanted to quickly ask you about the numbers and also about the mid-term plans. For this fiscal year, I wanted to just kind of organize my head about the increased cost. What you have explicitly mentioned this earnings briefing, again, there's going to be an expansion of the logistics center, the lease fee is going to go up. Fragrance related company has newly joined your group. Amortization is about JPY 600 million or JPY 700 million. Any other incremental costs that I should be mindful of?
Sure. Thank you very much for your question. I'd love to answer that. About the expansion of the warehouse and the cost increase related to it, there is a very long period of free rent, we don't expect significant increase of the cost there. There will be increase of amortization, it's about the same level as it has been. There will be variable costs that will go up along with our sales.
Aside from that, there is no further new costs. We need to be mindful of the impact of what is happening in the Middle East. There may be surcharge. That will be included in our terms with the delivery company. We have, in fact, still are thinking our plan. Okay.
I want to ask about your EBITDA. There's depreciation and due diligence and other M&A related costs. Amortization is JPY 2.3 billion, and combined with JPY 69.4 billion, that's JPY 71 million. Would you say that JPY 1 billion will be going to due diligence and other? There is a difference of JPY 71 million and JPY 69.4 billion. Do you hear me?
Yes.
Sorry, we lost her sound halfway through. I apologize. Do you hear me now?
Yes.
I apologize. EBIT plus A calculation. Your OP was JPY 69.4 billion, amortization of goodwill was JPY 2.3 billion. If you combine them, it is JPY 71.6 billion. Would you say that approximately JPY 1 billion is M&A cost? For FY 2026, there's OP and amortization. Aside from them, how much, like, due diligence related costs do you have? For FY 2026.
Nagao-san, thank you for your calculation. I wanna give you the breakdown of that JPY 1 billion. Sorry. Yeah, JPY 1 billion. JPY 700 million is FA fee and due diligence fee related to this. There's some variance, as you mentioned. There's acquisition allocation, that's PPA. There's amortization that takes place under amortization goodwill and also depreciation cost. There's JPY 300 million that was recorded as a depreciation fee. All combined it adds to JPY 1 billion. Make sense. For this fiscal year. Sorry for going into details. There will be additional JPY 700 million amortization. That's like rebuild. You expect it is JPY 74.4 billion.
SA related cost, you expect that to be about JPY 500 million?
Yes, you're right. There's Lyst that's going to be depreciated and High Link depreciation cost. That all amounts to about JPY 400 million.
Got it. Thank you. I wanna ask my last question to Mr. Sawada. EBITDA, you are aiming to do JPY 90 billion. When you calculate the CAGR, it's going to be 5%. When I look at your past results, I feel like there's more potential for it to grow. How do you look at the path leading to that JPY 90 billion? Would you say that you expect to have some ups and downs there? Absolutely. You've given our guidance that our CAGR is 5%. Would it go up in a J curve way or like, how do you look at a path there?
Thank you. Our CAGR, it is true that we expect it to be about 5%. Basically, ZOZOTOWN that's inclusive of the acquisition fee. We have a plan to do incremental JPY 20 billion GMV base in a phased manner, and then that could be JPY 30 billion in the next year. Sorry, correction. We don't expect this to be JPY 30 billion in the next year. Basically, we want to stably and consistently add on JPY 20 billion every year. Got it. Other domains are in the profit. Our plan is for those new domains to start generating profit in the coming years.
Got it.
Thank you, Nagao-san, for your question. Moving on to Yamaoka-san.
Hello. Yamaoka from Nomura Securities. Hello. You're silent. Hello. Do you hear it? Sorry about that. I'd like to ask you a couple of questions. First, your 4th Q, ZOZOTOWN GMV and then also the actual promotion fees. You said that you used more than what remains in the 3rd quarter. Is it correct for me to understand that you used actual promotional expenses so that you can grow healthily in the 4th quarter?
In the last fiscal year, we were a bit behind in our GMV up until third. In order to get incremental GMV growth, we needed to implement promotions. The type of promotions we conducted in FY 2025 was slightly different from what we used to do in the past.
I see. Then there's consignment growth. We expect that to be 4.1 sub net. I feel like it is a milder growth that you expect than previous years. Is it correct for me to understand the purpose of this is that you don't want to stress yourself too much?
Right. When you just take GMV alone, we are going to continue to. We could spend on promotions. However, the efficiency may not be as great. We could do that, but we want to have a disciplined investment. We came to this conclusion to do 4.1% growth.
Okay. Another question. Earlier you mentioned that in the medium term, you want to constantly do increments of JPY 20 billion GMV. Is that ZOZOTOWN and Yahoo combined on an annual basis?
Right. JPY 20 billion. It's going to be a bit more than that, actually. It also includes the Yes.
Are you saying that it's not JPY 20 billion incremental? Because if it's only JPY 20 billion, I thought that you're only expecting to do 3% growth, but it's going to be a little more than that, would you say?
Yes. Yes. Constantly trying to do a little more than that. Y ou've been talking about increasing the number of new users as well as activating existing users.
You used to show that with a chart of a Y-axis. That policy hasn't changed significantly?
That hasn't changed significantly, but what we have found out is that increasing the frequency of usage is quite costly. It's actually when it comes to GMV growth, it's more efficient for us to focus on new user acquisition. Compared to the chart that we have shown you in the past, I feel like I can say that we're shifting more towards the new user acquisition.
Okay. For depreciation, as I was looking at the handout, it seems like that is planned to grow. Is that because of the new businesses that you want to establish?
Right. I want to talk about last fiscal year versus this fiscal year. At the end of last fiscal year, we adopted system related automation equipment at the warehouse, the depreciation of that will start. That's why we are expecting to have a slight increase of that.
When I look at the handout, if this is not if I'm not mistaken, I think, for FY 2025 it was JPY 5.3 billion, for FY 2026, is it going to be JPY 6.7 still for depreciation?
Yes, JPY 6.7. That increase is mainly coming from that equipment that you adopted newly? Well, the biggest one is that, yes. There are other small ones that are going to increase. It's safe for you to think that it's mainly around the logistics centers.
Got it. Thank you. Thank you very much for your question. Go ahead.
Hello, Kazuhaya from UBS Securities. Can you hear me okay? Good. Thank you. Hello. My first question is the following. This is about the CapEx. You said JPY 11 billion. Could you give me the breakdown of that? That's my first question.
Sure. I'd like to answer that. JPY 8 billion is going to Narashino 3 that we are planning to newly establish. We're investing into the material handling equipment of that warehouse. On top of that, there is replacement or refurbishment of the existing one. That's done JPY 2.5 billion and also a little more than JPY 1 billion for offices.
Okay. Then you shared the medium term plan until FY 2029. In total, how much CapEx do you expect to invest in the next four years in total?
Let's just talk about that then. Please understand that this is based on the assumption that we're just going to look at the existing businesses. For existing businesses, we expect to have similar level of CapEx, meaning, it's about JPY 11 billion, approximately JPY 11 billion. We are not expecting to expand our logistic spaces. We believe that for others, we expect to do additional JPY 3 billion-5 billion products.
Okay. You acquired a fragrance company. How much was it? JPY 4.9 billion that you closed. How much do you plan to invest in M&A in the next four years? How much budget do you have for M&A? Okay. Would you like to answer that? Should I? Or do you think Kobayashi-san should go? I can go. Okay. On an annual base, was it JPY 2 billion, enough?
In terms of P&L, we are going to tolerate a loss of total of JPY 2 billion on an annual basis. Kazahaya-san, you wanted to ask about how much investment we plan to make in M&A, right? That is really case by case. You haven't really come up with a specific number around that. Basically, you are eager. You can also do borrowing, so looking at your balance sheet. If you're eager to grow, yes, there is we put a cap onto it, which is P&L impact of JPY 2 billion. That's EBITDA plus.
Okay, got it. Next is about High Link. No, before that. Sorry. I believe that you also have an option to establish a new business from scratch. May I ask why you needed to buy High Link? The background of that decision, and then how is their business performance and how is their fiscal year looking like for this year?
Sure. Kobayashi-san, would you be able to answer that?
Thank you for your question. High Link, what it basically does is to offer subscription model business, to like put perfumes into little bottles and send them to end users. They have a very deep expertise in putting perfumes into small containers. They have like a clean room to do that, and it takes time for us to do something similar. We would have to invest a lot in creating a facility like that. That's why we were interested in them. At ZOZOCOSME fragrances are the category that are selling a lot.
Offering trial sizes of fragrances, I believe that the demand for that is there. They'll be able to complement that part. When the user finds fragrance or scent that they like, they'll be able to buy a full bottle. We'll be able to build that synergy. They already generating about JPY 2 billion- JPY 3 billion in sales, they are making hundreds of millions of JPY in profit now. They are starting to manufacture, like diffusers, room fragrances, they are in like Loft. They have a distribution channel that we don't know. They're going to expand their business using ZOZOTOWN. It's not so much about ZOZOTOWN, but it's really more about like encouraging ZOZOTOWN users to use COLORIA services.
It's really about like giving them the ZOZOTOWN traffic. When they find a fragrance that they like, they can come to ZOZOTOWN and buy a full bottle. You mentioned that they're already doing sales of JPY 2 billion-JPY 3 billion. What is their growth rate? They were founded in 2017 or so, this is a subscription business model. Are they growing significantly?
That may not be the case. I mean, they're not doubling or tripling their size, but they do have solid growth.
That JPY 2 billion or JPY 3 billion is included in GMV?
No, we are planning just to record partially this one to GMV. The subscription delivery is more considered to be a service outside of the GMV. They also sell online their room fragrances and diffusers. It's not much. That will be recorded in the other GMV for us. The subscription revenue will be coming to others.
That's incorporated into this plan already?
Yes.
Got it. Makes sense. Thank you. That's all from me.
Thank you very much. Kawano-san, go ahead.
Hello, Kawano from Goldman Sachs here. I feel like you receive a lot of questions from different areas. What I want to do is to just ask you a qualitative question. One is about AI, your initiatives around AI. ChatGPT and WEAR collaboration to propose outfit. You also have this LINE official account, it's like styling account, right? To propose an outfit. You're just starting these services, I don't think a lot of people are coming from these channels. How's that going? When you propose outfit on ChatGPT, Gemini is probably going to be strong in the future as well. Are you concerned that maybe your data could seep into Gemini from ChatGPT? Let's talk about the traffic generation impact.
It is still quite limited to tell you that. For ChatGPT, we so in order for us, the user needs to come up with a demand. Sorry, the user needs to come up with a specific command to reach our API. Usability wise, it's quite limited. We'll be able to improve that. When the UI becomes better, I believe that the situation will improve quite significantly. I also want to talk about LINE. We're using our own account, but we haven't had a full collaboration with LINE, so the impact is still limited.
Why do we do this? You might ask. We have to be the first one to do this. We look at the data transactions that happens on a daily basis so that we can continue to polish our offerings. For the data part, we believe that we can continue to improve this. The world that we envision is that the data that we have is literally owned by us. LLM is going to come up with ways to access our API, and we'll be able to reinterpret their commands and come up with our proposal. As long as we have that data source, the brands could be from anywhere.
That's really what we have in mind. I believe that I partially answered to your second question. This data, our proprietary data, I don't think there will be an architecture that enables third party to steal our proprietary data because we interpret their command.
Okay, got it. Makes sense. Can I ask another question? In your presentation deck, you said that you want to, you have examples of like peripheral areas of fashion that will resonate with your ZOZOTOWN users. I think WEAR was another one. WEAR is another example of that. When it comes to monetization of these areas, I feel like there is no set formula or like a success methodology. Y ou talked about hair salons and tooth whitening and men's esthetic, et cetera.
For fragrance, you're going to use High Link to act as the fragrance world. I think we need to closely observe what's going to happen in that field. How do you plan to monetize these peripheral areas?
Thank you for your question. I guess the biggest thing here is that we have existing users of ZOZOTOWN, and then we want to bring that traffic over to peripheral areas. We already have 13 million, and of course, there are a bunch of other categories than just More Fashion. As AI progresses, as we speak, I believe that we will enter into an era where individuals can develop their own app. It's easy to make an app, but when it comes to traffic generation other companies will start to copy what you do.
We already have a user base of 13 million. That is a big difference. For us to enter and branch out into new markets and new areas, what we want to do is to fully utilize this user base of 13 million.
Okay. The 13 million users of ZOZOTOWN, you want to start from that user base and then bring them out to other areas. Is that what you have in mind? If they go out to buy fashion items, that means that will eat up the GMV of ZOZOTOWN, we don't want to do that.
If we are introducing them to new categories, there will be no cannibalization from ZOZOTOWN. That's what we aim to do.
Okay. Got it. Thank you. Thank you for your question. It's past the ending time. From here on, please ask just one question each. Kanamori-san, go ahead.
Hello, Kanamori from Nikko. I'm trying to decide one question. I think I lost your audio. It's okay. You can ask the question. Okay. I want to ask about logistics centers. The impact on FY 2026 will be lease, also depreciation. That was the additional JPY 1.4 billion. The gist of the main part of that will be coming from the logistics centers. There's Narashino 3, there's going to be new rent fee that will start. For FY 2027, what is the impact year-over-year? For FY 2028, there is going to be a full year impact, Narashino will be gone.
May I ask how much logistic center basis impact do you plan for FY 2027 into FY 2028? Because More Fashion EBITDA growth seems to be quite small and that this could be a reason for it.
Yeah. Thank you for your very long question. I wanna talk about what we have as visibility. Narashino 3, from March of FY, from March of 2027, we're going to start renting it, and then for the 6th month it's going to be free rent. From there's going to be rent paid to be recorded at JPY 160 million every month now. That's what we foresee for Narashino 3. Narashino 2, we are terminating the contract with them. We plan to terminate the contract in March of 2028.
We are incurring a little over JPY 100 million every month now, so that will be gone from March 28. Narashino 2 doesn't have shipping, ship out equipment, it's just for inventory. By losing it, we won't have a significant reduction of the burden, financial burden. For the new logistics center, it's going to be over JPY 20 billion. There is going to be generation, depreciation as Tsukuba is established, is going to be established.
Okay. My second question following, maybe I'm just kinda building on what Kazahaya-san asked. In the medium term, you have to generate sales from near and overseas. Would there be change to the investor return?
What did you say?
Investor return.
Oh, okay. No. We are currently, we're not planning to change our investor return policy.
Next. Go ahead.
Hello. I just want to ask two quick questions. I'm sorry. My first one is about the medium term. EBITDA margin, you're not gonna tell me what that's going to be, but your organic growth rate. Is that going to grow in hand with OP growth, or are you planning to do M&As and set up new physical stores to come up with the guidance for the midterm?
I want to differentiate organic and non-organic growth rate separately. Okay. I'd like to answer that. Far, for Near and Global Domain. We already have some specific plans about possible M&A candidates. We're not really considering the margin contribution of them so much. When you think about the margin now, the basis of that is going to be the profit of ZOZOTOWN. Did I answer your question?
For the Global Domain, you said JPY 5 billion and with Lyst only this is a pretty big number. My understanding was that you're going to also factor in other businesses, and then ZOZOFIT business model. How is that going to develop?
That was what I was paying attention to. Sorry for jumping.
For, is it like the old ZOZOSUIT where you have a business model that enables you to sell clothes on the spot? I just wanted to check your business model for ZOZOFIT. Out of that JPY 5 billion, how much will be coming from ZOZOFIT?
Sure. Yuna-san will answer that. I'm sorry. I can't really hear what you said. I couldn't really comprehend what you said. I apologize.
ZOZOFIT business model, and then out of that JPY 5 billion that you'd like to do with Global Domain, how much of that will be coming from ZOZOFIT? Okay. ZOZOFIT business model so far it has been subscription model. They pay a certain amount on a monthly basis. When they do that, they'll be able to fit their body. Of course you can do that free of charge. If you'd like to get additional information, you have to pay monthly fee.
Going forward, there is going to be like affiliate type of model. What we want to do is to start generating revenue by bringing traffic to an affiliate services. The breakdown of that JPY 5 billion, I'm afraid we cannot disclose that in terms of the percentage. As of today, how much the percentage that we expect coming from fit is quite limited.
All right. Thank you very much for your question. Let's go to Oliver.
Hi. Thank you. It's good to see you have growth plans for the future. I'm curious, is there any reason why you decided to launch a midterm plan now and any reason you chose four years? Thank you.
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OK. Just to clarify page 47, you have this AI Readiness Score. Where are you now? I think you said you aim to get to level three.
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When do you think you will be at level three?
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Okay. [ Non-English content] Okay. Got it. Thank you.
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