Lyst, Once Worth $700M, Sold to Japan’s Zozo for Just $154M: A Shocking Fashion Marketplace Deal

In the ever-evolving landscape of fashion startups, the recent acquisition of Lyst by Zozo highlights the challenges and transformations within the industry. Lyst, once valued at a staggering $700 million, has been sold to the Japan-based e-commerce giant for a mere $154 million in cash.

About Zozo and Lyst

Zozo is not only a prominent player in the fashion industry but also owns several brands, including Wear by Zozo, Zozotown, and Zozosuit. The company gained widespread attention when its founder, Yusaku Maezawa, achieved internet fame with the “most retweeted tweet,” offering to give away 100 million yen for retweets.

Future of Lyst Under New Ownership

Zozo has announced plans to maintain Lyst as an independent entity, retaining its current CEO, Emma McFerran. This acquisition comes at a time when the e-commerce landscape is fraught with uncertainty, presenting challenges for Lyst on multiple fronts:

• U.S. Tariff Hikes: Increased tariffs are raising concerns about global trade and impacting smaller companies that cater to U.S. consumers. Currently, nearly one-third of Lyst’s revenue is generated from U.S. sales.
• Intense Competition: Lyst faces fierce competition from both specialized online fashion retailers and giants like Amazon and Temu.
• Shift in Investor Focus: Investors have shifted their attention towards artificial intelligence (AI), pressuring non-AI companies to demonstrate similar growth trajectories.

Transforming Fashion Discovery with AI

Lyst and Zozo have expressed their commitment to “Transforming the Future of Fashion Discovery through AI and Technology.” While specific details remain scarce, this initiative aims to leverage technology to enhance the shopping experience.

Global Reach and Brand Aggregation

This acquisition not only strengthens Zozo’s presence in the U.K. but also expands its international footprint. Lyst boasts a diverse customer base across 190 markets, with:

• 30% of its business from the U.S.
• 24% from the U.K.
• 34% from Europe

Lyst operates as a marketplace, featuring a wide array of products from over 27,000 brands, including renowned designers and retailers like Prada, Gucci, and Valentino.

The Impact of the Pandemic on E-commerce

During the COVID-19 pandemic, Lyst benefited significantly from the boom in e-commerce. In May 2021, the company raised $85 million, achieving a valuation of around $700 million. However, the subsequent closure of the IPO window and a return to pre-pandemic consumer behavior led to a decline in gains for many e-commerce companies, including Lyst.

Recent Performance and Financials

As of the year ending March 31, 2024, Lyst reported revenue of £50.1 million ($64 million), showing stability compared to the previous year (£50 million). While the company remains unprofitable, it has made significant strides in reducing its losses from £23.7 million to £510,000. Additionally, Lyst posted an operating profit before taxes of £443,000.

Looking Ahead

Emma McFerran, Lyst’s CEO, expressed optimism about the future, stating, “This is an exciting moment for Lyst, and a win-win for our fashion ecosystem of shoppers and partners as we move forward as part of ZOZO Group.” The key question remains whether Lyst can leverage economies of scale under Zozo’s umbrella to foster growth and profitability.

For more insights into the world of fashion startups and e-commerce trends, visit our Fashion Startups page and learn more about the latest industry developments at Business of Fashion.