Stream Co.,Ltd.

The internet mail-order business has low entry barriers, and competition has intensified due to the aggressive expansion of major consumer electronics retailers and major internet mail-order operators. If relative competitiveness declines due to advances by competitors, this could affect business performance. As a countermeasure, the company is pursuing differentiation through the use of web customer service tools and improved customer service.

The company depends on Yamada Denki Co., Ltd. for 94.2% of its purchase amount under a franchise agreement, making it the company's primary supplier of goods. If this agreement is terminated or not renewed, or if it is amended on terms unfavorable to the company, this could disrupt stable procurement and have a material impact on business performance. As a countermeasure, the company seeks to maintain a good relationship through close communication with Yamada Denki.

If Yamada Denki Co., Ltd. changes its management policy or business strategy, or if a new competitive relationship arises with the company group, the group may be forced to reconsider its basic strategy and capital structure, among other matters. Yamada Denki mainly conducts consumer electronics retailing, operating its own stores and wholesaling to franchisees, and its trends directly affect the company group's business development.

Customer acquisition for the internet mail-order business depends on price comparison sites, search engines, internet malls, and similar platforms. If system troubles occur at these platforms or if contract terms are changed unfavorably for the company, this could hinder customer acquisition and the acquisition of new customers. As a countermeasure, the company is strengthening its response to search engine algorithm changes and diversifying its acquisition channels through the use of web advertising, newspapers, magazines, and other media.

The company group is heavily dependent on the internet mail-order business, but growth of the EC market has become somewhat moderate in the mature retail market. If market expansion does not proceed as expected, or if the internet mail-order business becomes difficult due to unforeseen external factors, this could affect business performance. As a countermeasure, the company is pursuing business diversification, including the full-scale launch of its 3PL (third-party logistics) business.

The internet mail-order business is highly dependent on communication networks, and if a system failure occurs due to hardware or software malfunctions, concentrated access, computer viruses, unauthorized external intrusion by hackers, disasters, or other causes, continuing operations may become difficult, which could affect business performance. As countermeasures, the company has strengthened daily system monitoring and failure detection systems, implemented security measures, conducts regular site vulnerability diagnostics, and continues to invest in system infrastructure.

Because logistics operations such as product storage, receiving and shipping, and delivery are outsourced to external vendors, failures or troubles at these vendors, or force majeure events such as earthquakes, could disrupt shipping and delivery operations. If service interruptions or suspensions occur, or if contract terms are changed unfavorably by the vendor, and alternative measures cannot be arranged, this could affect business development and performance.

The internet mail-order business is operated in compliance with regulations such as the Act on Specified Commercial Transactions, the Unfair Competition Prevention Act, the Act against Unjustifiable Premiums and Misleading Representations, and the Act on the Protection of Personal Information. If these regulations are strengthened or new legal regulations are enacted, the company may be forced to take new measures to strengthen management, which could affect business performance. As a countermeasure, the company works to reduce risk by gathering information on legal regulations and institutional reforms and utilizing advice from external experts.

The company holds a large amount of personal information belonging to users of its internet mail-order business. Although it has established a personal information management framework, including the formulation of Personal Information Management Regulations and the appointment of a chief privacy officer and management supervisors, there is no guarantee that leakage can be completely prevented. If personal information is leaked or misused, this could affect business performance through damage to corporate image, decline in brand strength, claims for damages, and loss of credibility, among other effects.

Group company X-1 Co., Ltd. develops, manufactures, and sells cosmetics, health foods, and other products under its own private brand. If unforeseen defects or side effects occur in these products, the company would bear product liability, which could affect its business and performance. As a countermeasure, the company manufactures products in accordance with quality control standards and maintains appropriate insurance coverage in preparation for product liability.