It is time, we would like to begin ZOZO's FY 2026 first quarter Q&A session for institutional investors. As was the case for the earnings briefing, we have Yanagisawa and also Director and COO, Fuminori Hirose, as well as the General Manager of Corporate Planning Office, Yusaku Kobayashi is here with us. These three will be answering your questions. We plan to wrap up the session at 6:00 P.M. Should you have any questions, please use the icon to raise your hand. When called upon, please unmute yourself and state the company as well as your name before asking your question. Terai-san, please go ahead. Thank you very much for this opportunity. My name is Terai from JP Morgan Securities. I have two questions. First question, ZOZOTOWN and LINE Yahoo! Shopping GMV. You mentioned that it was lower than expected because of the lower temperatures, 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's 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 then in July was a little bit cooler, but it's been reversed this year. 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. In LINE Yahoo! Shopping, we will use a 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, the top line grew by 30%, what's the currency impact 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, organically, GMV is growing a little bit more positively, we don't disclose specific numbers. We are seeing better performance than last fiscal year. Thank you very much. I have one more follow-up question. The checkout function is on track, if you proceed on track, do you believe that the trends should improve in the second half of the year? This fiscal year, LYST business plan, the numbers include increasing the number of merchants using the checkout feature. If we can progress on track, we should be achieving our fiscal year target, we don't know if we will overachieve those targets, we should be able to achieve our targets. That's it from my end. Thank you. Terai-san, thank you very much for your question. Moving on to Yoneshima-san. Please go ahead. Thank you. Citigroup Securities, Yoneshima. I also have two questions. First question. The number of buyers are growing quite steadily, the average retail price and average order value, Yanagisawa-san, you did explain that earlier, we understand there's factors impacting those KPIs, even if you're doing promotions, AOV, ARP continues to decline, this trend hasn't really changed. I don't know if it's AOV or ARP or maybe both. 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 their 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 JPY 12,000 or above free shipping threshold, and those free shipping campaigns we've conducted regularly and will 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. 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 trend. 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. The purchasing power, and also if the brand's ARP increases as well, of course, if that matches up very well, we'll see a positive effect. Second question is not about the earnings result. You said that you're going to buy a maximum of JPY 30 billion. It's quite a sizable repurchase amount. You bought LYST and you bought HIGH LINK as well. Even with that in mind, you have announced a very sizable share repurchase. You'll be spending money on M&A going forward. I know that you're trying to improve your ROE. I thought that it was a little bit early to conduct the 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 will do more M&As in the future. Even with that in mind, we still have sufficient funds. We wanted to efficiently use the cash on hand. 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. 80% is a five-year average of total shareholders' return. In order to achieve 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, and we're assured. Understood. Thank you very much for your question, Yoneshima-san. Moving on to Kazahaya-san, please go ahead. This is Kazahaya from UBS 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 in second quarter onwards? Will this continue? That's the first question. Thank you.K 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, Nekoposu 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. 2025, October, since then, we have been enjoying lower shipping fees due to better terms. From the third quarter, halfway through the third quarter, of course, it will be one year since we started enjoying those lower costs. Y o Y, we shouldn't see that much of an impact. Understood about the Nekoposu 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 Nekoposu even more heavily. Is that right? In terms of the fourth quarter, compared to the fourth quarter, the first quarter, we can send spring-summer products. That fits more of those products fit within the Nekoposu. Of course, we are enjoying benefits from Nekoposu 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. 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 over-achieving, under-achieving? We're on track. That's it from me. Thank you very much. Thank you very much for your question. Next. Yamaoka-san from Nomura Securities. My name is Yamaoka. Basically, one question. GMV, I just wanted to double-check. This is double-checking, the first quarter, the total GMV was on track with the plan? The total GMV. Yes. June, it was a little bit weak, 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, the number of members are increasing. On the other hand, the average retail price has come down. Therefore, even though the number of members are increasing, GMV hasn't changed all that much. How do you connect the increase in membership to higher GMV? I don't know if connect is the right word, is it more advertising, or how do you plan to expand GMV? What kind of initiatives are you thinking of to increase the GMV? New acquisitions, it has been growing since last year, last fiscal year. In the first year, even if we try hard, they will not really buy as much the first year. Second, third year will be more key. They are not going to convert right after they become a member. That is 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 niaulab 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. Mr. Hisahiro, thank you very much for your question. Next, moving on to Nagao-san. My name is Nagao from BofA. I have three questions. One, GMV. I do not think it is a direct competitor with you, but Mercari is doing quite relatively well, and they are selling more men's and women's categories as well. I think that those categories are growing for Mercari. Your users, the purchase amount, frequency, do you think in addition to that, are you seeing any impact from competitors? Do you feel that there is a threat? Thank you very much. We do not 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 underperformed in June. We are not too concerned about Mercari, for example. Thank you. Second question is about advertising. You said that we have the plans for advertising that are quite similar to the previous year. I think that you are 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 is the forecast for the advertising business going forward? 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 is not actually increasing. The other types of advertising. Sorry. The banner and also search ads are not growing as much, but the packaging ads are actually growing well. I do not think that it will be quite tough to grow those ads with the current products that we have. We are considering other types of products, but we do not think that we will 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. 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, for now, we do not 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. Related to that, I have a follow-up question. Material handling equipment, you invested in that and there's more depreciation because of that. You said that increased by 0.2 points this quarter, but when you look holistically, of course, can we expect that the investment has actually worked in your favor, improving efficiency? Yes. We already calculated that, 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 these kind of equipment. Understood. Thank you. Thank you very much for your question. Kanamori-san, please go ahead. This is Kanamori from Nikko 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, and with respect to this, you have disclosed your top line sales by HIGH LINK. 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 HIGH LINK 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 may be able to offer some progress updates at the end of this fiscal year. Kobayashi, can you talk about the detailed numbers for HIGH LINK? With respect to HIGH LINK, in terms of other sales, it's included in other sales. Sales target for HIGH LINK is about JPY 2 billion-JPY 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 the contribution to profits, compared to the total sales, its contribution is going to be limited. 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. You talked about this, organic growth was positive. You mentioned that, but HIGH LINK growth, what's the status of the growth for HIGH LINK? Sorry, 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 that will help the HIGH LINK sales grow. You mentioned 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. Thank you very much, Kanamori-san, for your question. Any other questions? If not, it is a little bit early, but we would like to wrap up the Q&A session. Thank you very much for joining this session.