Fashion has become a disgusting style, and so has fashion startups after all. Lyst, a high-end fashion market once valued at $700 million, was acquired by Japan-based fashion and e-commerce business Zozo for just $154 million in cash.
Zozo owns many fashion brands, including Wear, such as Zozo, Zozotown, and Zozosuit. But you may have heard of Zozo for another reason. Its founder once had “most retweeted tweets.”
Zozo said it will continue to operate UK-based LYST as a standalone business, with current CEO Emmamakferan remaining in the company.
Needless to say, Lyst is on sale at a price tag that is much lower than its final rating, but that’s a sign of the times. The e-commerce world faced a grand level of uncertainty, and Lyst itself was dealing with headwinds from three different directions.
First, US tariff hikes raise questions about the future of global trade, including its impact on small businesses around the world selling products to US consumers. Almost a third of London-based LYST’s revenues come from US sales now
Second, even before these tariffs became an issue, Lyst faced massive competition online not only from other experts, but also from giants like Amazon and Temu.
Third, today’s technology investors rely heavily on large scales for things related to artificial intelligence. It’s a growth story that incorporates AI anyway, in addition to putting a lot of pressure on companies that are not in the space to show similar growth trajectories.
Apparently Lyst and Zozo have gotten a note. The pair “changes the future of fashion discovery through AI and technology,” the company noted in its announcement. The phrase is mentioned again in the release, but there is no specific details as to what it means.
In addition to scaffolding in the UK, the deal also gives Zozo international business. Lyst says it has customers in 190 markets, with 30% of its businesses coming from the US, 24% from the UK and 34% from Europe.
LYST leaned against the long tail of a market model and fashion brand consolidated. It claims to offer products from 27,000 brands, including both designers and retailers. The list includes Prada, Gucci, Bottega Veneta, Valentino, Miu Miu, Coach, Michael Kors, Hugo Boss, Selfridges, Harvey Nichols and Harrods.
The company was one of the winners of the e-commerce boom at the peak and shortly after the Covid-19 pandemic. When it raised $85 million in May 2021, Lyst was valued at around $700 million. Fidelity leads that round, and other well-known investors in the company include Accel, Balderton, and Molten (formerly Draper Esprit). The company at the time even described the funds as pre-IPO rounds.
However, not only did the IPO window slum shut down a few months later, but many e-commerce companies quickly contracted during that period as consumers returned to pre-pandemic spending habits. And investors moved on to the next big thing: AI.
And, more specifically, the fashion e-commerce market remains challenging.
A spokesperson explained that LYST’s 160 million users are “unique users of the year,” but the numbers include active shoppers and mere window shopping. It is difficult to know how successful a company’s conversion strategy (important for e-commerce companies) has been. And it wasn’t alone – other big names in high-end fashion commerce like Falfetch have also been nominated since the pandemic.
LYST recorded revenue of £50.1 million ($64 million) for the year ended March 31, 2024. This is roughly the same as the previous year (£50 million), according to the latest company housing declaration in December 2024.
Meanwhile, Lyst remained unprofitable, but that year was able to dramatically narrow the losses to £510,000 from £23.7 million a year ago. It also recorded operating profits prior to a tax of £443,000.
“This is an exciting moment for Lyst and a win-win for the fashion ecosystem of shoppers and partners as they move forward as part of the Zozo group,” McFerran said in a statement.
Now, the question is whether gaining an economies of scale with Zozo will give you the lift needed to turn this around.
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