SAN-A CO.,LTD.

The Group operates its supermarket chain and convenience store business exclusively within Okinawa Prefecture, so economic conditions and personal consumption trends in the prefecture, adverse weather, and changes in the competitive environment directly affect its financial position and operating results. Because of this geographic concentration, risk diversification is more limited compared with nationally dispersed chains. As countermeasures, the Group is refining its store opening strategy based on prior surveys of trade area population and competitive conditions, and pursuing differentiation through a wide range of products and services spanning groceries, apparel, household goods, and dining out.

Since all stores are concentrated within Okinawa Prefecture, a large-scale disaster such as an earthquake, or a typhoon that approaches several times a year, could cause temporary store closures or damage, potentially having a material impact on the Group's financial position and operating results. With regard to typhoons in particular, the Group has established a "Typhoon Countermeasure Manual" and works to maintain the product supply system and achieve early reopening of operations in cooperation with its subsidiary San-A Transportation Co., Ltd. The Group also works to minimize impact through ongoing investment in infrastructure, facility inspections, disaster preparedness drills, and the formulation of a business continuity plan (BCP).

The Oyama Distribution Center in Ginowan City, Okinawa Prefecture, concentrates key functions including inspection and sorting of apparel and dry food products (DC), bulk purchasing and processing of meat and seafood (fresh food processing), and manufacturing of rice balls, prepared foods, and similar items (food factory). If a natural disaster or other event were to render this center inoperable, product supply to all stores would be halted, potentially affecting the Group's financial position and operating results. As countermeasures, the Group is investing in aging infrastructure, conducting regular inspections, disaster preparedness drills, and formulating a BCP, though no alternative facility is explicitly described.

The Group is subject to a wide range of regulations, including the Large-Scale Retail Store Location Act, the Antimonopoly Act, environmental and recycling-related laws, and food safety management laws. If a violation occurs, restrictions on business activities could affect the Group's financial position, operating results, and cash flows. As countermeasures, the Group has established and disseminated "Compliance Guidelines," deliberates and proposes improvements through its Compliance Committee, and has set up an internal reporting hotline to enable early detection.

If food poisoning occurs at a food processing center or store, defective products are sold, or public anxiety about food safety spreads due to infectious diseases such as avian influenza, this could affect store operations and lead to customer attrition, impacting the Group's financial position and operating results. The Group has established a "Quality Control Department" to thoroughly manage hygiene and quality at food processing centers and stores, working to ensure food safety. In the event an incident does occur, the Group's policy is to minimize the impact on customers through prompt disclosure.

The Group holds large volumes of customer personal information through "San-A Card" and other services. If an unexpected incident or accident results in an information leak, this could damage social credibility and affect the Group's financial position and operating results. The Group has established an information management framework through its basic policy, management regulations, and manuals on personal information, along with appropriate operation and management and thorough employee training. In the event a leak does occur, the Group's policy is to minimize the impact on customers through prompt disclosure.

The consolidated subsidiary Lawson Okinawa, Inc. operates a franchise chain using the Lawson, Inc. brand. If misconduct occurs involving franchise store owners or store staff, the brand image of the chain as a whole could be damaged, potentially affecting the Group's financial position and operating results. As countermeasures, supervisors patrol their assigned stores to share information and provide support, and a detailed management support framework has been established through branches that divide the Okinawa area into multiple regions.

If a large-scale outbreak of an infectious disease such as COVID-19 leads to infections among employees or temporary store closures, this could disrupt business activities and affect the Group's financial position and operating results. The Group works to prevent the spread of infection, including recommending basic infection countermeasures during outbreak periods, while minimizing impact by responding to changes in customer values and needs.