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Japan Zozo see profits recover this year after bodysuit blunder

TOKYO (Reuters) – the Japanese online fashion retailer Zozo Inc said it expects its profits to recover in the current fiscal year, after booking, for the first time, an annual decrease of revenues on a failed experiment with customization and confrontations with the fashion brands.

FILE PHOTO: A woman is seen in front of the logo of Zozo, who is active in Japan popular fashion shopping site Zozotown, and is officially called ” Start Today Co., at an event launching the debut of his formal clothing items, in Tokyo, Japan, July 3, 2018. REUTERS/Kim Kyung-Hoon

But Zozo the results also show its obligations to the installation and liquidity position of the dwindling, with the emphasis on worries about the finances of the company that runs on the popular Zozotown online shopping mall.

Zozo has conquered almost half of Japan online sales of mid – to high-end clothing through the setting up of a website catering for the fashion-forward, higher-income customers.

It has sought to transform itself in the past few years of an e-commerce site in a tech-retail hybrid due to the launch of an own brand and the launch of a tailor-made service with the help of a body that allowed users to upload measurements online.

The bodysuit, along with billionaire CEO Yusaku Maezawa, the plans for a moon flyby as the first passenger on Elon Musk’s SpaceX mission, had helped the spread of Zozo’s name worldwide. The end of the Zozosuit has a shadow on her strategy.

A lot of people who ordered the body cannot use to buy clothes, which Zozo saddled with the enormous costs of the distribution of the catch without seeing it. It is also worthwhile to go with the orders, causing some customers to wait several months for delivery.

Zozo ‘ s group operating profit for the year ended March fell 21.5 percent to 25.7 billion yen ($229 million). That was worse than the most recent forecast of 26.5 billion, which was marked down from an initial projection of 40 billion yen.

To add to the misery, some fashion brands that helped Zozo build on its reputation of the site. Some of them started their own e-commerce sites, while others grew dissatisfied with what they saw as excessive discounting in the Zozotown online shopping mall.

Clothing company Holdings Co., fashion retailer United Arrows, and kids brand, Miki House have to leave the site.

Zozo is already to regain momentum by adding more mass-market retailers, such as Shimamura, but some analysts say that this has hurt her first, fashion-focused image.

Shares of Zozo have almost halved in the past year on the fear that his popularity may be taking, and that its liquidity position looked weak. The company secured a 15 billion yen commitment line of banks in late March.

Thursday’s results show of Zozo’s cash and cash equivalents fell to 21.6 billion yen at the end of March, compared with 24.6 billion a year earlier, while the total liabilities jumped to 56.3 billion of 29.9 billion.

But the company said it expects the business to pick up the Japanese consumers were just beginning to buy clothes online.

Predict a 24.7 percent rise in operating profit to 32 billion yen for the current financial year.

($1 = 111.9300 yen)

Reporting by Ritsuko Ando; Editing by with the ipad has Himani

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