January 31, 2019 / 6:59 AM / 6 months ago

Japan's Zozo cuts outlook, blames failed Zozosuit

TOKYO, Jan 31 (Reuters) - Japanese fashion e-commerce website Zozo Inc cut its business outlook for the full year and slashed its dividend, blaming its failed body-measuring Zozosuit service for weaker-than-expected sales.

Zozo, with a nearly 50 percent share of Japan’s e-commerce market for mid to high-end fashion, had tried to branch out by launching its own private brand and a made-to-measure service.

But last quarter it scrapped the Zozosuit, a polka dot bodysuit it distributed for free and allowed users to upload body measurements, amid complaints over distribution delays.

“By distributing the ‘Zozosuit’ for free so that people could take measurements, we were hoping to create demand for the Zozotown business, including the private brand. But the impact did not have the scale that we had hoped for,” the company said in a statement.

It said it expects full-year operating profit of 26.5 billion yen, down around 19 percent from a year earlier. It previously forecast profit to rise to 40 billion yen.

The novelty of the bodysuit, as well as billionaire CEO Yusaku Maezawa’s announcement as the first private passenger on Elon Musk’s SpaceX moon flight, helped the company attract attention from both consumers and international investors.

Appearing regularly in gossip magazines with a celebrity girlfriend as well as his collection of art and flashy cars, Maezawa also gained notoriety last year by signing up to be the first private passenger on Elon Musk’s SpaceX moon flight.

But investors have recently turned wary about the company’s outlook after apparel company Onward Holdings Co pulled its brands off Zozo, with media reports citing friction between the website and brands over pressure to offer discounts.

The company’s shares have halved in the past six months.

Zozo said it now expects to pay a year-end dividend of 10 yen per share instead of an original forecast of 22 yen. (Reporting by Ritsuko Ando; Editing by Himani Sarkar and Christopher Cushing)

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