ZOZO,Inc. FY2027 Q1 Earnings Report

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Executive Summary

The key points of the current results are that revenue and profits increased, while both the gross profit margin and operating margin remained at high levels and improved modestly. Revenue was ¥561.3B (+3.9% YoY), operating income was ¥178.8B (+5.7%), ordinary income was ¥178.7B (+7.4%), and net income was ¥119.0B (+4.6%), with all four major indicators exceeding the previous year. As SG&A expenses grew by +2.2%, below revenue growth of +3.9%, the operating margin improved to 31.9% (31.3% in the previous year), while the highly profitable business structure, reflected in a gross profit margin of 93.5%, was maintained.

Factors Affecting Results

【Revenue】Revenue was ¥561.3B, representing a +3.9% YoY increase. The Company operates a single EC Business segment and does not disclose a segment-level breakdown; however, progress against the full-year plan of ¥2,419.0B (YoY +5.9%) was 23.2%. Although this was slightly below the standard quarterly progress rate of 25%, the variance remained modest.

【Profit and Loss】Operating income increased to ¥178.8B (+5.7%), ordinary income to ¥178.7B (+7.4%), and net income to ¥119.0B (+4.6%). Within a highly profitable structure characterized by a low cost of sales and a gross margin of 93.5%, SG&A expenses were ¥345.9B, representing a YoY increase of only +2.2%, below revenue growth of +3.9%. As a result, the operating margin improved by +0.5pt, from 31.3% to 31.9%. Non-operating income and expenses were limited, at ¥1.2B of income and ¥1.3B of expenses, while extraordinary losses consisted solely of a ¥0.2B loss on the disposal and sale of fixed assets, resulting in a limited impact. The decline from ordinary income of ¥178.7B to net income of ¥119.0B was attributable to an effective tax rate of 33.4%, with no special factors involved. Overall, the results indicate increases in both revenue and profits, accompanied by a modest improvement in operating leverage.

Key Financial Indicators

【Profitability】The operating margin was 31.9%, improving by +0.5pt from 31.3% in the previous year, while the net profit margin also edged up to 21.2% from 21.1%. The gross profit margin remained stable at the high level of 93.5%, reflecting a platform-based earnings structure.【Cash Flow Quality】Cash and deposits declined by -46.4% from ¥694.2B in the previous year to ¥372.0B, while accounts receivable of ¥517.5B accounted for approximately 29% of total assets of ¥1788.7B and constituted the core of working capital. Inventories were small at ¥41.3B, indicating limited inventory risk.【Investment Efficiency】ROE was 12.1%, while total assets were ¥1788.7B, down from ¥1982.6B in the previous year. The equity ratio was 55.1%, up +1.2pt from 53.9% in the previous year, indicating a balance between asset efficiency and capital soundness.【Financial Soundness】Current liabilities were ¥688.0B against current assets of ¥1056.4B, ensuring short-term payment capacity. While non-current liabilities were ¥114.6B, or only 6.4% of total assets, goodwill of ¥260.1B accounted for 26.4% of net assets of ¥986.1B, indicating a somewhat greater concentration of M&A-related assets.

Cash Flow Analysis

As the cash flow statement is not disclosed, cash trends are analyzed based on changes in the balance sheet. Cash and deposits decreased by -¥322.2B (-46.4%) from ¥694.2B to ¥372.0B. Key factors include a -¥65.0B decrease in income taxes payable, from ¥115.96B to ¥50.92B, indicating cash outflows from tax payments; a +¥28.4B increase in treasury stock, from ¥110.39B to ¥138.81B, indicating that share repurchases continued; and a +¥41.97B increase in goodwill, from ¥218.12B to ¥260.09B, suggesting that investment expenditures related to M&A were incurred. Inventories also increased from ¥34.96B to ¥41.26B, with the accumulation of working capital also contributing to the decline in cash. As profit levels themselves remained on an upward trend, these cash outflows can be interpreted as reflecting more active investment and shareholder return activities.

Earnings Quality

Both non-operating and extraordinary income and expenses were minimal, indicating that the majority of profits were generated by the core business. Non-operating income of ¥1.2B and non-operating expenses of ¥1.3B were each less than 1% of revenue, while interest expenses of ¥0.7B were also immaterial as a financial burden. Extraordinary losses consisted solely of a ¥0.2B loss on the disposal and sale of fixed assets, limiting the impact of temporary factors. The progression from ordinary income of ¥178.7B to profit before tax of ¥178.4B and net income of ¥119.0B was attributable to the effective tax rate of 33.4%, with no unusual adjustments identified. Comprehensive income was ¥123.3B, nearly in line with net income of ¥119.0B. The variance was primarily attributable to a +¥4.2B foreign currency translation adjustment, and no significant accrual-related factors that would impair earnings quality were identified.

Earnings Forecast and Guidance

Progress against the full-year plan was 23.2% for revenue at ¥561.3B/¥2,419.0B, 24.0% for operating income at ¥178.8B/¥744.0B, 24.0% for ordinary income at ¥178.7B/¥744.0B, and 23.9% for net income at ¥119.0B/¥497.0B. Although all figures were slightly below the standard quarterly progress rate of 25%, the variance was small at 1–2pt. As the earnings forecast was stated as “None” for revisions, progress can be assessed as generally in line with the plan.

Shareholder Returns

The Company’s annual dividend plan is ¥40 per share, resulting in a payout ratio of approximately 71.2% (¥40 ÷ ¥56.2) against forecast EPS of ¥56.2. The dividend paid in the previous period was ¥19; however, a simple comparison is not possible because the period classifications differ. Treasury stock increased by +¥28.4B from ¥110.39B in the previous year to ¥138.81B, indicating that share repurchases have continued. The total return ratio, including dividends and share repurchases, is considered to be higher than the payout ratio alone. Given that cash and deposits declined by -46.4% YoY, the allocation of funds for shareholder returns should be monitored going forward.

Risk Factors

1. Decline in cash liquidity: Cash and deposits decreased by -46.4% from ¥694.2B to ¥372.0B. Cash outflows from share repurchases and tax payments occurred concurrently, narrowing the cash buffer compared with the previous year.

2. Short-term concentration of liabilities: Short-term borrowings were ¥200.7B, broadly unchanged from the previous year, while non-current liabilities were ¥114.6B, or only 6.4% of total assets. The liability structure is therefore concentrated in current liabilities of ¥688.0B. Refinancing trends should be closely monitored during periods of changing interest-rate conditions.

3. Increase in goodwill and intangible assets: Goodwill increased by +19.3% from ¥218.1B to ¥260.1B, while total intangible assets reached ¥334.2B, equivalent to 33.9% of net assets of ¥986.1B. The proportion of M&A-related assets has increased, requiring attention to the potential impact of impairment charges.

Industry Benchmark (Reference; Company Analysis)

Industry Benchmark (retail)

Profitability and Returns

In terms of profitability, both the operating margin and net profit margin substantially exceeded the industry median, placing the Company at a high level within the industry.

Growth and Capital Efficiency

The revenue growth rate was slightly below the industry median, placing the Company at or below the middle of the industry in terms of growth speed.

※Source: Company compilation

Key Points from the Results

1. In addition to increases in revenue and profits, the operating margin improved by +0.5pt YoY, confirming that the Company has maintained a highly profitable structure substantially above the industry median. The sustained high gross profit margin of 93.5% demonstrates the strength of the platform-based business model.

2. As SG&A expense growth of +2.2% was below revenue growth of +3.9%, operating income grew faster than the top line. This indicates that cost control contributed to profit growth.

3. While cash and deposits declined by -46.4% YoY, goodwill increased by +19.3%, indicating that two forms of capital allocation—share repurchases and M&A investment—are proceeding simultaneously. The balance of future capital allocation will be an important point of observation affecting the soundness of the balance sheet.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly available data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥248–¥262 at ±1% for the cost of equity, and ¥251–¥260 at ±0.1 for ω.

Notes:

• Because forecast ROE is high, ROE is capped at 50% for calculation purposes (the differences between scenarios may therefore appear small).
• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat on the high side.

(Calculation model: Residual income model / Interest rate reference month: 2026-06 / This value is not a forecast or guarantee of the future share price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.

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