Thank you very much for this opportunity. My name is Terai from JPMorgan Securities.

I have two questions. First question: ZOZOTOWN, LINE Yahoo commerce GMV.

You mentioned that it was lower than expected because of the lower temperatures, but how do you plan to achieve the fiscal year targets, and what's the forecast going forward?

Hirose-san, please go ahead.

Thank you very much for your question. ZOZOTOWN and LINE Yahoo shopping GMV forecast going forward: June, as I mentioned before, we were impacted by climate.

However, July is doing well. Last year, from June, we saw higher temperatures, and those temperatures—and then July was a little bit cooler, but it's been reversed this year, but July has been doing well for now.

As I mentioned before, the number of buyers have been increasing as well. Promotions, mainly web advertising, we will be investing proactively, we will continue to increase the number of new users.

With respect to, at least, the ZOZOTOWN business, we aim to achieve the fiscal year target. LINE Yahoo shopping, we will use the ZOZO festival to try to achieve the fiscal year target.

That's it. Thank you.

Thank you. The second question is about LYST.

First quarter, it grew by—the top line grew by 30%, but what's the currency impact and as well as the organic growth taking into account the different timings for the fiscal year wrap-up?

We are seeing some impact from the currency, but organically, it is—GMV is growing a little bit more positively, but we don't disclose specific numbers, but we are seeing better performance than last fiscal year.

Thank you very much. I have one more follow-up question.

The check-out function is on track, and if you proceed on track, do you believe that the trend should improve in the second half of the year?

This fiscal year, the numbers include increasing the number of merchants using the check-out feature, and if we can progress on track, we should be achieving our fiscal year target, but we don't know if we will overachieve those targets, but we should be able to achieve our targets.

That's it from my end. Thank you.

Thank you. Citigroup Securities, Yoneshima.

I also have two questions. First question: The number of buyers are growing quite steadily, but the average retail price and average order value, Yanagisawa-san, you did explain that earlier, and we understand that's factors impacting those KPIs, but even if you're doing promotions, AOV, ARP continues to decline, and this trend hasn't really changed.

I don't know if it's AOV or ARP, or maybe both. How do you try—what kind of initiatives are you thinking of to try to reverse the downward trend?

Hirose-san, maybe this is your question as well?

The average retail price, honestly, it's out of our control actually. It's hard for us to control because the brands set the retail prices and also set the discounts as well, we cannot control the ARP at least.

In terms of AOV though, we have set a ¥12,000 or above free shipping threshold, and those free shipping campaigns we've conducted regularly, and we'll continue to do so to increase the AOV. We don't have a clear initiative to further enhance or improve the AOV.

This is a follow-up question, but consumers as well, do you feel like they're spending less or is there any impact from the consumer trends, or is it just mainly based on the free shipping campaigns or the prices set by the brands?

We don't know if they're unwilling to spend, clearly. The data doesn't show that clear trends, but the inflation does continue, there are many places where they're spending money and they have to spend more as well, maybe the users are thinking about their total spend.

It would be great if the inflation would work in your favor, but the purchasing power and also if the brands' ARP increases as well, of course, and if that matches up very well, then we'll see a positive impact.

Second question is not about the earnings result. You said that you're going to buy a maximum of ¥30 billion.

It's quite a sizable repurchase amount, and you bought LYST, and you bought highlink as well. Of course, even with that in mind, you have announced a very sizable share repurchase.

Of course you'll be spending money on M&A going forward, but I know that you're trying to improve your ROE, but I thought that it was a little bit early to conduct a share repurchase. Can you share background as to why this was the right time for you?

There are multiple reasons. First, cash flow-wise, it's not a problem to do so.

M&A, we might—we will do so, do more M&As in the future, but even with that in mind, we still have sufficient funds. We wanted to proactively use the cash on hand.

Also share prices are relatively reasonable right now. Therefore, we thought that it would be a good time to conduct share buyback.

The third reason is ROE. We wanted to improve the ROE, stop it from falling any further as quickly as possible.

So 80% is a 5-year average of total shareholders return, but in order to achieve that, that's why we decided to undertake the share repurchase at this point in time.

Cash flow-wise, there's no issues. That's great to hear.

I'm reassured. Understood.

This is Kazahaya from [unclear] Securities. I have two questions.

The payroll, logistic-related payroll and packing and shipping expenses has dropped. In the presentation material you explained this to a certain extent.

However, could you give more color? Why is this happening, and second quarter onwards, will this continue?

That's the first question. Thank you.

Kobayashi-san, please go ahead.

In terms of the logistic-related expenses, we have made many improvements, small improvements in improving operational efficiency, especially in terms of we have spent a lot, invested in improving education when receiving inventory, and that has produced great results as well. In terms of costs, of course, the inventory levels, it will be key to see if we can maintain the optimal inventory levels.

If we can actually continue to have a well-balanced inventory level, we should be able to achieve better efficiencies, cost savings in comparison to the previous fiscal year. That's the first question.

In terms of shipping, generally speaking, 2025 November, Nekopos is a very compact shipping option, and the size has become bigger actually. As a result, we've seen we can ship more items using the very compact shipping fee.

Therefore, we're seeing great cost savings from the bigger compact size shipping option available. And 2025 October, we have been, since then, enjoying lower shipping fees due to better terms.

From the third quarter, halfway through the third quarter, of course, it will be 1 year since we started enjoying those lower costs, YoY we shouldn't see that much of an impact.

Understood about that Nekopos has worked positively for you. That's happened from before, right?

Not just for first quarter. The fourth quarter, you were enjoying benefits from that as well, and you're actually using Nekopos even more heavily, is that right?

In terms of the fourth quarter, compared to the fourth quarter, the first quarter we can send summer, spring summer products, and more of those products fit within the Nekopos, of course we are enjoying benefits from Nekopos this quarter than the previous quarter.

Yamato's contract hasn't changed since, right?

No.

Thank you very much. The second question: ZOZOCOSME update, achievement rate against the budget.

Can you talk about the cosmetics business? Thank you.

We are doing well against the budget. We are welcoming more and more brands, and more brands are taking part proactively in different promotions.

Then we also had a NARS fest as well. Our recognition is increasing.

First quarter, we've done quite well in cosmetics. It's on track with the budget, or are we overachieving, underachieving?

We're on track.

That's it from me. Thank you very much.

my name is Yamaoka. Basically one question: GMV, I just wanted to double check.

This is double checking, but the first quarter, the total GMV was on track with the plan?

The total GMV? Yes.

June, it was a little bit weak, but April, May we did well. If you look at the whole entire quarter, we're on track?

Yes. It's related to that a little bit, but the number of members are increasing, and on the other hand, the average retail price has come down.

Therefore, even though the number of members are increasing, but GMV hasn't changed all that much.

How do you connect the increase in membership to higher GMV? I don't know if the connect is the right word, but is that more advertising, or how do you plan to expand GMV?

What kind of initiatives are you thinking of to increase GMV?

New acquisitions, it's been growing since last year, last fiscal year. In the first year, people won't buy as—even if we try hard, they won't really buy as much the first year.

Second, third year will be more key. They're not going to convert right after they become a member, so that's a given.

We want to make sure that they stay with us and buy more. In order to encourage them to buy more, we need to add categories, brands.

We want to offer them an AI agent NIAO service and fully utilizing those services so that users can discover, and we can provide products that the users want. That is first and foremost important.

Understood. Thank you.

My name is Nagao from BofA. I have three questions.

One, GMV: I don't think it's a direct competitor with you, but Mercari is doing quite relatively well, and they're selling more men's and women's categories as well. I think those categories are growing for Mercari.

Your users, the purchase amount, frequency, in addition to that, are you seeing any impact from competitors? Do you feel that there is a threat?

Thank you very much.

We don't really think about competitors. Brands' physical stores, of course, we keep track of how their monthly performance are doing.

I talked about June not being that great for us, but other brands as well underperformed in June. We're not too concerned about Mercari, for example.

Thank you. Second question is about advertising.

You said that you have the plans for advertising that are quite similar to the previous year, and I think that you're on track with your internal plans. Second quarter onwards from last fiscal year, the hurdles is not that high, and the advertising is doing okay.

What's the forecast for the advertising business going forward, and is there any changes in the initiatives for the advertising business?

I can answer that. I can take that as well.

Advertising: ZOZO AD is actually listing ad, and also banner ads as well as advertising to include flyers within the packaging. The packaging advertising isn't actually increasing, but the other types of advertising—the banner and also search ads are not growing as much, but the packaging ads are actually growing well.

I don't think that—it will be quite tough to grow ZOZO AD with the current products that we have, we are considering other types of products, but we don't think that we'll see explosive growth for the advertising business.

Thank you. Lastly, about costs: You mentioned the economic terms being more favorable from October of 2025 with the delivery partner, but going forward, for example, do you foresee any additional improvements in the economic terms, any changes you foresee in terms of shipping or any kind of other efficiencies gains, any initiatives around that?

In terms of shipping costs, we don't expect any changes in the economic terms, it will stay at the current level. In terms of the operational efficiency, as Kobayashi mentioned, costs should be coming down to a certain extent.

Over the midterm, as I mentioned before, next fiscal year onwards, 2028, we have a new logistics center that will be made available, and we will automate that to improve our shipping efficiency, we want to make sure that we can make that happen. That's some of the key big things for us logistically.

As

related to that, I have a follow-up question. Material handling equipment, you invested in that, and there's more depreciation because of that, and you said that increased by 0.2 points this quarter.

When you look holistically, of course, can we expect that the investment has actually worked in your favor, improving efficiency?

Yes, we already calculated, simulated that when we implemented those equipment. We won't see a benefit right away, but over the long term, we believe that it will contribute to cost savings.

That's why we decided to invest in this kind of equipment.

Understood. Thank you.

This is Kanamori from [unclear] Securities. I just have one big question.

The midterm KPI is more fashion, near fashion, and global domain, but of course, I understand that we shouldn't be keeping track of your progress yet, but your progress is still unclear. With respect to LYST, you have disclosed your top line sales, but highlink, I didn't know where it was included in the sales.

Qualitatively, can you talk about the contribution? I think operating profit and EBITDA would be better, but what's the uplift that it's contributing to, for example?

If you can give us more details about highlink as well?

In terms of disclosures, as you just mentioned, more fashion, yes, we have some numbers, but near fashion, global, we don't have anything to disclose yet. We have included qualitative updates for near and fashion and global.

That's the status in terms of midterm plans and KPIs. At the moment, we probably maybe able to offer some progress updates at the end of this fiscal year.

Kobayashi, can you talk about the detailed numbers for highlink?

With respect to highlink, in terms of sales, other sales, it's included in other sales. Sales target for highlink is about ¥2 billion to ¥3 billion.

We've announced that already. From the total, if you consider the total, it's not going to have a huge impact.

The contribution will be quite minimal. In terms of contribution to profits, compared to the total sales, its contribution is going to be limited, and as you can calculate from that, it's not going to significantly impact the consolidated profit.

That's the current status.

Company-wide profit is after or before goodwill?

Either way. Either way.

You talked about LYST, and organic growth was positive, you mentioned that. Highlink growth, what's the status of the growth for highlink?

I'll respond to that question as well. No change from the previous year is the current situation.

Going forward, second quarter onwards, we will enhance our synergy or integration with ZOZO, and we believe that will help the highlink sales grow. You mentioned the including advertising within the ZOZO packages, and you started to do that at the end of the first quarter, we'll see results in the second quarter?

The first quarter, we tested the ROI and tested which users would respond more positively to the advertising. Yes, the results will come further down the line.

Thank you.