HONEYS HOLDINGS CO., LTD.

In the women's apparel specialty store industry, fashion trends change rapidly and product life cycles are short. If the Group fails to offer products that match customer preferences, sales may decline and impact business performance. The Group seeks to reduce this risk by monitoring sales trends, improving the precision of product planning and merchandise purchasing, optimizing inventory management and control, and reducing lost sales opportunities.

The Group operates mainly in an in-shop format, and is therefore directly affected by changes in the customer-drawing power of the commercial facilities in which it operates stores. In addition, if new store openings and closures do not proceed as planned, business performance may be affected. The Group aims to minimize this risk by accurately grasping the business conditions of each store and taking appropriate measures in a timely manner.

The Group imports products from overseas, entrusting production to a factory operated by its subsidiary in Myanmar as well as to garment manufacturers in Myanmar, Bangladesh, Cambodia, Vietnam, China, and other countries. As a result, significant fluctuations in exchange rates may affect business performance. As a countermeasure, the Group hedges risk by entering into forward foreign exchange contracts covering a certain percentage of its purchase amounts.

Deterioration of regional conditions (geopolitical risk, pandemics caused by infectious diseases, etc.) in the countries where suppliers are located, such as Myanmar, Bangladesh, Cambodia, Vietnam, and China, may disrupt procurement activities. The Group strives to manage this risk by continuously analyzing regional conditions in supplier countries and taking timely and appropriate action.

Sales of apparel and accessories are susceptible to fluctuation due to abnormal weather, such as cool summers and warm winters, as well as increasingly severe and frequent natural disasters, which may affect business performance. In light of the growing frequency of abnormal weather associated with global warming in recent years, the Group aims to build a robust management structure that is less susceptible to the effects of weather fluctuations.

If the head office, distribution centers, core stores, or main production sites are damaged by a large-scale disaster such as an earthquake, key functions may be temporarily lost, potentially causing significant impact on business performance. The Group established crisis management regulations in the wake of the Great East Japan Earthquake and has put in place preparations for unforeseen contingencies.

In the event of a pandemic, widespread store closures may occur due to a large number of employees becoming infected or requests from commercial facilities to suspend operations. In addition, impacts on the supply chain from city lockdowns and transportation disruptions may worsen business performance. The Group has established a management framework that includes diverse and flexible working arrangements, thorough infection prevention measures, rigorous production adjustment and inventory management, securing of alternative production sites, and liquidity measures and financial soundness assurance.

If cyberattacks (such as unauthorized access or computer viruses) on core systems, accounting systems, and other systems result in system outages or leakage of confidential data such as product planning information, financial information, or personal information, business activities may be disrupted and brand image damaged, potentially affecting business performance. The Group implements countermeasures against unauthorized access, viruses, and unauthorized communications based on the latest cyber risk information, and works to raise employee security awareness through information security training.