Yahoo Japan to Buy Stake in Fashion Site -- WSJ
September 12 2019 - 3:02AM
Dow Jones News
By Megumi Fujikawa
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 12, 2019).
TOKYO -- The Japanese billionaire who wants to fly around the
moon on Elon Musk's spaceship is cashing out of his online fashion
business back on earth by selling control to Yahoo Japan Corp.
Yahoo Japan plans to take a 50.1% stake in Yusaku Maezawa's Zozo
Inc., which operates a popular fashion site in Japan, paying about
$3.7 billion, the companies said Thursday.
Mr. Maezawa, who will step down as the site's chief executive,
is one of Japan's most prominent tech entrepreneurs, known for his
attention-grabbing exploits. He paid $110.5 million for a
Jean-Michel Basquiat painting of a black skull in 2017 and last
year appeared with Tesla Inc.'s Mr. Musk to announce that he had
bought the first ticket to fly around the moon on a SpaceX
vehicle.
Mr. Maezawa has been trying to revitalize Zozo, which reported a
decline in annual profit for the year that ended in March. It was
the first such drop since the company's shares went public in 2007.
The cost of developing and delivering the body-measuring Zozosuit,
which Mr. Maezawa had thought would become a catalyst for growth,
weighed on its profits.
"I will move on to a new road," Mr. Maezawa said on Twitter
after the announcement.
Yahoo Japan, which operates a widely used shopping site in
Japan, said it would buy Zozo stock at Yen2,620 ($24.30) a share.
It said Mr. Maezawa, who currently owns a 36.8% stake in the
company, would sell most of those shares -- a 30.4% stake -- to
Yahoo Japan.
Zozo shares rose 15% in early Tokyo trading to Yen2,495, just
below Yahoo Japan's offer price. Yahoo Japan said it would begin a
tender offer in early October, but added that Zozo would keep its
separate listing, so not all shareholders who wish to sell can
necessarily do so.
Yahoo Japan is independent of the Yahoo website in the U.S. The
U.S. Yahoo site is owned by Verizon Communications Inc.'s media
unit, while Yahoo Japan is listed in Tokyo. Its shares were up
slightly on Thursday. SoftBank Group Corp. and its Japanese
telecommunications unit together owned 47.5% of Yahoo Japan shares
as of March 31.
Mr. Maezawa founded Zozo in 1998 as a seller of imported CDs and
records. The company made it to the top of Japan's e-commerce
fashion world by offering leading brands on its Zozotown site that
previously were available only in elite department stores.
But the chief executive has acknowledged that his attempts to
develop the Zozosuit -- with sensors and an app to take body
measurements -- and a Zozo house brand of clothing haven't taken
off.
"I wanted to provide clothes that perfectly fit any body shape,
but honestly it didn't work out very well," Mr. Maezawa said in a
recent interview with The Wall Street Journal.
Customers complained that using the suit didn't result in a
particularly good fit and some called it a publicity stunt. As
investors grew skeptical about Mr. Maezawa's vision for Zozosuit,
the company's stock price fell in half.
Amid the struggles, Mr. Maezawa, a frequent Twitter user whose
posts often influenced the stock price, said he would take a break
to focus on restoring his business. Zozo's profits rose 28% in the
April-June quarter.
He has been working on a new project to offer customers
better-fitting shoes. The company is preparing to distribute the
Zozomat, which combines a smartphone app with a special paper mat
that has markers to enable users to take 3-D scans of their
feet.
His departure may have come as a surprise to investors, but he
was known for making swift decisions.
Referring to a Japanese proverb that says sitting three years on
a cold stone will make it warm, Mr. Maezawa told the Journal, "I
sit on that stone for three days. I can't wait for three
years."
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com
(END) Dow Jones Newswires
September 12, 2019 02:47 ET (06:47 GMT)
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