EDION Corporation

Sales of seasonal products such as air conditioners are heavily influenced by weather conditions (cool summers, warm winters, prolonged rainy seasons, etc.). The Company adjusts inventory, delivery, and installation systems by referring to the Japan Meteorological Agency's medium- to long-term forecasts, and when impacts occur, it seeks to minimize the effects by changing product and sales policies, such as strengthening the promotion of products less affected by seasonal factors.

In the regions where the Company operates stores—Hokkaido, Hokuriku, Kanto, Chubu, Kinki, Chugoku, Shikoku, and Kyushu—there are numerous competitor stores handling similar products, and competition may intensify further due to future new store openings by others. Intensifying competition could adversely affect business performance and financial condition through price competition and a decline in customer traffic.

As the Company operates stores mainly in western Japan, large-scale natural disasters such as typhoons and earthquakes could relatively affect a large number of stores, creating risks of business suspension, damage compensation liabilities, and impairment of fixed assets and inventories. Disruption to product supply due to disasters affecting business partners could also impact performance. The Company strives to ensure employee safety and business continuity through the introduction of a safety confirmation system and based on its business continuity plan (BCP).

The Company holds large volumes of personal information, such as card member data and customer purchase history, as well as confidential technical and business information. If a cyberattack or unforeseen incident leads to an information leak, it could damage corporate trust and reduce sales. In addition to strict management under the "EDION Group Information Security Management Regulations," the Company is strengthening unauthorized access monitoring and employee training.

The Company holds substantial store-related tangible and intangible fixed assets, and impairment losses may be recorded if the carrying value cannot be recovered due to declining store profitability or due to changes in accounting standards. In the fiscal year under review, the Company recorded an impairment loss of ¥2,857 million, and it is working to recover profitability at underperforming stores through support measures such as sales promotion and pricing strategy reviews.

When opening new stores, the Company places the highest priority on profitability and only targets properties that meet certain conditions based on prior location surveys covering security deposits, rent, trade area population, and competitive conditions, among others. If the number of properties meeting these conditions falls short of the planned number, the Company's growth plans could be affected. The Company maintains daily information gathering and a rigorous screening system, including review of candidate properties at meetings attended by directors.

The Company outsources information system management, product delivery, installation and repair, industrial waste disposal, and other functions. If a contractor violates laws or guidelines, or goes bankrupt, this could disrupt business continuity and result in bad debt losses on accounts receivable, affecting performance. The Company manages this risk through strict screening and selection under the "Outsourcing Management Regulations" and continuous monitoring of contractors' creditworthiness.

Opening or expanding stores with sales floor area exceeding 1,000 square meters is subject to review and regulation by local governments under the Large-Scale Retail Store Location Law, and future store opening plans could be affected by legal regulations or regulatory changes, potentially preventing plans from proceeding as scheduled. Delays in regulatory compliance or non-approval could affect performance through delays or changes to store opening plans.

In 2012, the Company received a cease-and-desist order and a surcharge payment order (surcharge of ¥4,047 million) from the Japan Fair Trade Commission for abuse of superior bargaining position (violation of the Antimonopoly Act). Although the Company received a partial rescission and refund through a subsequent decision, the Tokyo High Court dismissed its claim in a ruling dated September 12, 2025, and the Company filed a final appeal and petition for acceptance of final appeal with the Supreme Court on September 26, 2025. Depending on the outcome of the litigation, additional damages, monetary levies, or business restrictions could arise, potentially affecting business performance and financial condition.

An outbreak of an epidemic or infectious disease in areas where the Company operates stores could reduce the number of customers visiting stores and shorten business hours, leading to lower sales. If such an outbreak develops into a global pandemic, delays in product supply from manufacturers and disruptions to logistics and delivery systems could also be expected, potentially having a compounded adverse effect on business performance and financial condition.