ZOZO, Inc.

The ZOZO Group, whose core business is EC site operation, has built its entire supply chain from order acceptance to delivery on IT systems. If a system failure occurs due to external attacks, internal misconduct, natural disasters, power outages, etc., it could seriously affect business activities. Server outages or transaction suspensions could impact not only operating performance but also social trust. As countermeasures, the company is strengthening network security, implementing server and data center redundancy, and utilizing cloud-based auto-scaling.

The company holds a large volume of personal information of members in Japan and overseas through ZOZOTOWN, WEAR, and ZOZOFIT. If information is leaked due to intent, negligence, or unauthorized access, it could result in claims for damages, brand damage, and impact on business. Violations of overseas regulations, including the EU's GDPR, could also result in substantial fines. The company is addressing this risk through ISO/IEC 27001 certification, strengthened access controls, and continuous security enhancement with advice from outside experts.

There is a constant risk of litigation arising from violations of laws such as the Act against Unjustifiable Premiums and Misleading Representations and the Act on Specified Commercial Transactions, as well as from inadequate information management, intellectual property infringement, and product defects. In the event of a serious incident, administrative sanctions, damages, and loss of social trust could seriously impact corporate value. The company has implemented multi-layered measures including training for officers and employees, establishment of an internal whistleblowing system, preparation of crisis response manuals, and strengthened collaboration between legal and business divisions.

SoftBank Group, SoftBank, LINE Yahoo, and other parent group companies directly or indirectly hold a majority of the company's voting rights, and conflicts of interest may arise in transactions such as user referrals, opening stores on Yahoo! Shopping, and adoption of PayPay. There is a risk that the parent companies' intentions could affect management in ways that harm the company's interests. The company has established the "Regulations on Maintaining Fairness in Transactions with the Parent Company Group" and has built a mechanism to exclude relevant directors from voting.

The company positions corporate acquisitions as an important management strategy and records a corresponding amount of goodwill on its consolidated balance sheet. However, the realization of risks not identified during pre-acquisition due diligence, changes in market conditions, or poor performance of acquired businesses could result in goodwill impairment losses or significant additional expenses, affecting the company's financial position and operating performance. The company addresses this through appropriate due diligence, PMI (post-merger integration) promotion, and regular monitoring and review of business plans.

The company outsources sales proceeds collection and product delivery operations to partner companies, and also uses third-party services for system infrastructure such as data centers. If a partner's financial condition deteriorates, transaction terms change, or an unexpected functional failure occurs, this could affect the business and operating performance. The company addresses this through continuous monitoring of partners' financial condition, server and data center redundancy, and preparation of backup plans.

The head office and major logistics centers are concentrated in Chiba and Ibaraki prefectures. If a large-scale earthquake, flood or storm damage, pandemic, fire, or similar event occurs, it could cause logistics disruption due to the failure of core systems and facilities, or a decline in service levels due to employees being unable to commute. Unexpected trouble or delays in large-scale system development could also affect business continuity. The company addresses this through establishment of backup policies for logistics centers, preparation of emergency response manuals, and ongoing disaster prevention drills.

The operation of ZOZOTOWN and WEAR is subject to legal regulations such as the Telecommunications Business Act and the Secondhand Articles Dealer Act. Amendments to existing laws or enactment of new laws could affect business operations. Delays in regulatory compliance or violations could undermine the stability and reliability of the business. The company addresses this by keeping abreast of the latest regulatory developments and strengthening collaboration between the legal and business divisions.

If employees' lives, physical safety, or health are harmed due to sudden natural disasters, spread of infectious disease, unforeseen accidents, or excessive workload, this could affect performance and business operations through loss of human resources, response costs, business disruption, and damage to corporate image. The company addresses this through safety education, disaster prevention drills, occupational risk assessments, introduction of remote work, and monitoring of employee stress conditions.