Kawasaki & Co.,Ltd.

In the Apparel Business, the company is highly dependent on sales of the Lake Alster brand, with its customer base concentrated among women aged 50 and older. A downturn in personal consumption due to economic fluctuations or changes in consumer preferences poses a risk of directly affecting business performance. As a countermeasure, the company is promoting diversification of its product lineup through the development of new products.

Mainstay products are ordered under a forecast-based production system overseas to reduce costs and avoid stockouts; however, if demand forecasts prove inaccurate due to economic fluctuations, competitor activity, or changes in consumer preferences, there is a risk of excess inventory arising from out-of-season or discontinued items. If excess inventory occurs, the recording of inventory valuation losses could worsen business performance, and the company implements valuation write-downs to help ensure management soundness.

The Apparel Business depends on imports for key raw materials and products, and since the termination of its derivative contracts in September 2018, the company has had no foreign exchange hedging measures in place. Fluctuations in the dollar-yen and euro-yen exchange rates directly affect import costs, posing a risk to business performance. No specific measures regarding the reintroduction of hedging instruments have been disclosed at this time.

The company depends on overseas locations such as China and Taiwan for product processing, and the ratio of overseas production is expected to increase further going forward. A wide range of risks in the sourcing and processing countries—including political and economic instability, unexpected changes in laws and regulations, trade protection measures, changes in import/export licensing requirements, tax system changes, exchange rate fluctuations, and differences in intellectual property protection systems—could affect business performance. No specific diversification measures against these risks have been disclosed at this time.

In the Apparel Business, design is a core source of competitiveness, but the emergence of imitation products by domestic and overseas operators has been confirmed, posing a risk of market erosion and damage to brand image. As of August 31, 2025, the company holds 11 registered trademarks and 5 registered designs in Japan, and seeks to defend its rights through trademark registration applications in multiple overseas countries utilizing the Madrid Protocol.

The company applies the "Accounting Standard for Impairment of Fixed Assets" and continuously examines the necessity of impairment; there was no impact on profit or loss for the fiscal year under review. However, depending on future trends in the fair value of fixed assets, their usage status, and the cash flows generated from them, there is a possibility that impairment losses may be recorded, posing a risk to business performance.

The company relies on borrowings from financial institutions to meet necessary funding needs, and the ratio of interest-bearing debt to total assets remains at a high level. If current interest rate levels fluctuate, there is a risk of an increase in financial costs affecting business performance. The company has indicated a policy of diversifying funding methods and strengthening equity capital going forward, but details of specific measures have not been disclosed.