Hokuyu Lucky.,Ltd.

The company operates 33 stores across Hokkaido, but the Hokkaido supermarket market is already in an overstored state, and the company is exposed to competition from rival stores as well as other business formats such as online retail. New competitor store openings within trade areas may affect business performance, and the company recognizes that there is a certain degree of likelihood that this risk could materialize. The company addresses this by strengthening store competitiveness through enhanced pricing and promotional policies, improved customer service, and product differentiation.

Incidents that undermine trust in food safety continue to occur, including safety issues with imported food, misrepresentation of raw materials or countries of origin, and outbreaks of livestock infectious diseases such as foot-and-mouth disease and avian influenza. Should such issues arise, procurement of goods may become difficult due to changes in supply routes or price fluctuations, and sharp price increases may lead to sluggish sales. The company addresses this through strengthened quality control systems and prompt provision of information to consumers.

Because the company handles many food products with short shelf lives and in-store processed foods, thorough temperature and hygiene control is essential. Should food poisoning or similar incidents occur, this could undermine trust in food safety and security and have a material impact on business performance. The company has established an in-house Health and Safety Office that independently conducts bacteriological testing of products and cooking utensils, and has developed manuals for hygiene management, freshness management, and sales standards. The company recognizes that there is a certain degree of likelihood that this risk could materialize.

The company manages order, customer, employee, and business partner information through information systems, including core systems, with nearly all routine operations processed via computers, servers, and cloud services. If the system loses functionality due to communication disruption from a natural disaster, virus infection, or unauthorized access, various operations could be disrupted, potentially affecting business performance. The company recognizes that there is a certain degree of likelihood that this risk could materialize. In addition to establishing data backup systems and building defenses against unauthorized access, the company has also taken out insurance to cover damages from external attacks.

Should an infectious disease such as COVID-19 spread on a large scale, the company may face shortened store operating hours or temporary closures, reduced customer traffic due to voluntary restraint from going out, and supply disruptions caused by business partners suspending or scaling back operations, potentially affecting business performance. The company recognizes that there is a certain degree of likelihood that similar infectious diseases could emerge again even after COVID-19, and addresses this through the establishment of a response headquarters under its risk management regulations, employee health checks, thorough disinfection, and installation of infection prevention equipment in stores.

In accordance with the Accounting Standard for Impairment of Fixed Assets, the company recorded impairment losses of ¥23 million in the fiscal year under review. Should impairment treatment become necessary in the future for held assets whose real value has declined or for underperforming stores, this could affect business performance, and the company recognizes that there is always a certain degree of likelihood of this risk materializing. The company addresses this through regular assessment of impairment indicators, investigation into the causes of declining profitability at unprofitable stores, and prompt formulation and implementation of improvement plans.

The interest-bearing debt ratio relative to total assets stood at a relatively high level of 39.1% in FY2024 (ended February 2024) and 41.3% in FY2025 (ended February 2025), and the ratio of interest expense to net sales also rose from 0.06% in FY2024 (ended February 2024) to 0.12% in FY2025 (ended February 2025). If interest rates are significantly raised due to economic conditions, monetary policy, or foreign exchange rate effects, interest expense could increase substantially, potentially affecting business performance. The company recognizes that there is a certain degree of likelihood that this risk could materialize. The company's basic policy is to fund capital expenditures through long-term borrowings or corporate bonds, and it manages its capital expenditure plans to avoid excessive interest-bearing debt.

New store openings with a floor area of 1,000㎡ or more, or changes to the sales floor area of existing stores, are subject to mandatory notification to and review by the prefectural governor under the Large-Scale Retail Store Location Law, requiring examination of a wide range of matters including parking, noise, and opening/closing hours. If planned store openings or renovations cannot proceed as scheduled due to the status of such reviews or regulatory changes, this may affect business performance. As a countermeasure, the company combines analysis of location conditions and trade areas with detailed examination of legal regulations, and strives to build good relationships with the relevant local communities.

In managing personal information, including data linked to the Individual Number (My Number) system, any leakage of information could result in damages liability and a decline in social credibility, potentially affecting business performance. In accordance with the Act on the Protection of Personal Information, the company strives to strengthen its management framework through the development of internal regulations, improved information system security, and enhanced employee training. The likelihood and timing of this risk materializing are difficult to predict.

Since the company's operations are centered on in-store sales at physical stores, large-scale earthquakes, typhoons, and other natural disasters or unforeseen accidents may hinder the continuation of store operations. In the event of a major disaster, business activities could be suspended, potentially affecting business performance; the likelihood and timing of this risk materializing are difficult to predict. The company addresses this through basic BCP policies, disaster response manuals, and regular evacuation and disaster prevention training drills.