JINS HOLDINGS Inc.

The company relies heavily on partner factories and trading companies in China for the manufacturing of eyewear frames and other products. Changes in China's political, economic, and social conditions, changes in legal regulations, or sharp increases in labor costs could disrupt product manufacturing and supply and lead to a surge in import procurement costs. As countermeasures, the company is promoting the diversification of production regions and manufacturing sites within China, establishing a domestic production system, and diversifying its supply chain across multiple countries and regions.

Since the majority of eyewear frames and a portion of lenses are imported directly from China and other countries, procurement costs are affected by foreign exchange fluctuations. In addition, translating the foreign-currency-denominated financial statements of seven overseas consolidated subsidiaries (of which four are operating companies) into yen is also affected by exchange rate movements. In periods of sharp yen depreciation, there is a risk that a surge in import procurement costs and fluctuations in consolidated financial figures could occur simultaneously. As countermeasures, the company monitors foreign exchange fluctuations, appropriately reviews selling prices, establishes a domestic production system, and reduces assets by compressing inventory at overseas subsidiaries.

In addition to the spread of alternative services such as laser vision correction surgery, if new vision correction and healthcare methods applying advanced technologies such as AI, AR/VR, and wearable devices emerge faster than expected, the structure of the eyewear market could fundamentally change, resulting in a decline in competitiveness. As countermeasures, the company is promoting the expansion of functional products, improving customer experience through DX, conducting research and development of advanced technologies in collaboration with specialized institutions, and pursuing differentiation through the establishment of healthcare services.

The company has expanded into China (2010), the United States, Taiwan (2015), the Philippines, Hong Kong (2018), Vietnam, and Mongolia (2025), and is considering further expansion into overseas markets. If unforeseen changes in laws and regulations, policy changes, fluctuations in political and economic conditions, rising labor costs, inadequate infrastructure, international tax risks, or social disruption due to terrorism or disease materialize, this could have a material impact on business performance and financial condition. As countermeasures, the company conducts thorough research on the market, legal regulations, and competitive environment prior to entry, and continuously monitors changes in the business environment after entry.

There is no clear legal provision as to whether refraction measurement conducted at the time of eyewear sales constitutes a "medical practice" under Article 17 of the Medical Practitioners' Act. If it is determined to constitute a medical practice due to amendments to laws and regulations or changes in interpretation, the company could be forced to change its business model, leading to a significant decline in net sales. As countermeasures, the company is enhancing skills and knowledge through an in-house training program, recommending ophthalmologist prescriptions for junior high school students and younger, as well as first-time users, and strictly adhering to an operating policy of not performing diagnoses or examinations that constitute medical practice.

The import and sale of eyeglass lenses and ready-made presbyopia glasses (general medical devices) as well as contact lenses (specially controlled medical devices) are subject to regulation under the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices. Changes, tightening, or reinterpretation of legal regulations, or non-compliance with laws, could lead to revocation of licenses, suspension of product supply, and loss of social trust. As countermeasures, the company has established specialized departments for eyeglass lenses and contact lenses respectively, and strives to comply with laws and regulations and maintain appropriate quality control.

As IT utilization advances, if unauthorized access, malware infection, or other incidents result in the leakage, loss, or falsification of important information assets including personal information, or if communication equipment failures cause information systems to stop, this could result in temporary suspension of business activities and loss of social trust, which could have a material impact on business performance and financial condition. As countermeasures, the company has established a specialized IT governance department, implements security measures tailored to each risk factor, has developed a privacy policy and information security regulations, and conducts continuous monitoring and improvement through monthly meetings of the Personal Information Committee and the Information Security Committee.

Securing and developing high-quality store employees and store managers is essential to realizing the store opening plan for global business expansion, and strengthening headquarters personnel in planning and development, production, IT, and administrative departments is also an important issue. If it becomes difficult to secure personnel commensurate with the plan, this could prevent store openings as planned and hinder differentiation from competitors, which could have a material impact on business performance and financial condition. As countermeasures, the company actively recruits both mid-career and new graduate hires, provides specialized qualification training such as for certified eyewear artisans, hires advanced IT/DX talent, operates a retention-focused HR system, and has raised base wages for full-time store employees and fixed-term employees.

Fixed assets recorded as store buildings, leasehold improvements, and equipment may require impairment processing if store profitability deteriorates significantly. In addition, continuous investment in IT infrastructure such as core systems and EC sites carries impairment risk if there are plan delays, cost overruns, or failure to achieve expected effects. Furthermore, investment securities held in connection with business expansion and new business investments may also require impairment processing if returns fall short of expectations, which could affect business performance and financial condition. As countermeasures, the company continuously monitors store profitability and performs impairment processing as needed, has established a specialized meeting body for system investment management, and monitors the performance progress of investees.

If significant human rights violations such as forced labor, child labor, harassment, or discriminatory conduct occur in business activities involving domestic and overseas partner factories, vendors, and other supply chain participants, this could lead to a loss of trust from customers and business partners, which could have a material impact on business performance and financial condition. As countermeasures, the company has formulated and applies the JINS Group Human Rights Policy, conducts human rights due diligence including throughout the supply chain, performs regular external audits of major suppliers, and has established multiple consultation channels to enable prompt remediation and corrective action.