Certain types of clients just prefer to deal with people who conform to what might be considered a more "conservative" appearance. Deviating from their expectations can reduce their level of trust, for instance, which can impact business dealings. This is especially true when dealing with customers from abroad, especially when there are other cultural differences at play.
Some people have also had very, very bad experiences with other people who dress or groom themselves in a specific way. It's not the appearance itself that is harmful, but rather the association it has to other people who were directly involved with bad experiences in the past.
An example of this are those Ruby on Rails developers who choose a so-called "hipster" appearance. It can only take one disastrous Ruby on Rails project for a client to consider all software developers who have such an appearance to be untrustworthy and unprofessional. Again, whether it's right or wrong, this can happen very easily.
The specifics of this particular case aren't very clear. But I wouldn't be so quick to underestimate the importance or impact of physical appearance in general, when it comes to business dealings.