BIC CAMERA INC.

Cyberattacks such as ransomware attacks may cause a wide range of damage, including the suspension of logistics, order-taking, and billing operations, leakage of personal information and confidential information, delays in earnings announcements, damage to brand image, and violations of laws and regulations such as the Personal Information Protection Act. Numerous serious incidents of this kind have occurred in recent years, and the impact on the four risk areas of business suspension, information leakage, management, and legal compliance has been specifically identified. As a countermeasure, the Company has established a Security Committee and is working to strengthen information security and cybersecurity.

The Company holds a large volume of personal information through its point card system, internet mail order operations, various documents, etc., and any unforeseen leakage could have a material impact on the financial position and business results. Seven group companies have obtained the Privacy Mark, and the Company has implemented internal regulations and safety management measures in response to the amended Personal Information Protection Act and the My Number system.

The Company is subject to a wide range of laws and regulations, including the Large-Scale Retail Store Location Act, the Antimonopoly Act, the Act against Unjustifiable Premiums and Misleading Representations, the Subcontract Act, the Home Appliance Recycling Act, and the Secondhand Articles Dealer Act, and new legislation, tightened regulations, or regulatory action could have a material impact on business results. On February 28, 2025, the Company received a recommendation from the Japan Fair Trade Commission based on the Subcontract Act, and is currently implementing recurrence prevention measures, such as regular training for officers and employees and legal compliance checks through questionnaires to business partners.

If competition with other companies in the home appliance retail industry intensifies further, it could have a material impact on the financial position and business results. The Company group is seeking differentiation not only through price competitiveness but also by strengthening its product lineup, services, and human resource development, and responding to changes in the competitive environment remains an ongoing challenge.

As of August 31, 2025, the Company group operates a total of 203 stores (42 Bic Camera stores, 139 Kojima stores, and 22 Sofmap stores), but store openings are concentrated in the Kanto region, primarily the greater Tokyo metropolitan area. If a major disaster such as an earthquake or other unforeseen event occurs in this region and disrupts store operations, it could have a material impact on the financial position and business results of the group as a whole.

As of August 31, 2025, 186 of the 203 stores are properties leased from lessors outside the group, and if it becomes difficult to continue use due to reasons on the lessor's side, or if a lessor becomes insolvent, this could disrupt store operations and have a material impact on the financial position and business results. The policy of primarily opening leased properties aims to avoid asset fixation and enable agile store openings and closures, but it inherently entails a structural issue of dependence on lessor risk.

Natural disasters such as typhoons, flood damage, and earthquakes, or the spread of infectious diseases such as COVID-19, may result in the incurrence of restoration costs for store facilities, temporary store closures or reduced business hours, and disruptions to product delivery. If these risks materialize, they are said to have a material impact on the financial position and business results, and the Company has established an emergency response headquarters system based on its crisis management regulations.

If merchandise supply becomes unstable due to global resource or parts shortages, or if demand changes exceed expectations due to abnormal weather or unseasonable conditions, sales may not proceed as planned, resulting in excess inventory that could have a material impact on the financial position and business results. Maintaining a system to procure optimal products in appropriate quantities and at appropriate prices to meet customer needs is a key business challenge, and the Company practices sales measures such as building good relationships with each supplier and vertically launching new products.

The Company group receives purchase rebates based on purchase performance, etc., under contracts with each supplier, but if future changes occur in purchase performance or in trading conditions, this could have a material impact on the financial position and business results. The Company has a high degree of dependence on industry-specific trade practices, and maintaining relationships with suppliers is an important element of its earnings structure.

If impairment processing becomes necessary due to declining store profitability or a significant decline in the market value of held assets, this could have a material impact on the financial position and business results. Details are described in the notes to the consolidated financial statements (Significant Accounting Estimates), and this is a risk requiring continuous monitoring in a business model with numerous leased stores.