JASON CO.,LTD.

There is a materializing risk that opportunities for low-price spot purchasing will decrease due to manufacturers reducing distribution volumes in response to food-loss reduction efforts, as well as rising procurement unit prices from general wholesalers and trading companies amid inflation. For the company's mainstay PET bottle beverages, the consolidated subsidiary Shonizawa Beverage Co., Ltd. has built new warehouse facilities and a full-production system to ensure stable supply; however, if the decline in spot-purchasing opportunities continues, it could lead to higher procurement prices and, in turn, higher selling prices, undermining the foundation of the company's low-price strategy centered on EDLP (Every Day Low Price) and potentially having a significant impact on business performance.

The products handled by "Jason" overlap considerably with those of convenience stores, drugstores, 100-yen shops, and supermarkets, and the rapid expansion of the e-commerce market has made cross-format competition risk a materializing concern. The company is countering this through thorough low-cost operations and the continuous introduction of original products and joint-venture (JV) products; however, if it loses its competitive edge in price competition, this could result in a decline in net sales and deteriorating profitability.

The company primarily opens stores using "turnkey" vacant properties (properties with existing fixtures), but there is a materializing risk that the availability of such properties will decrease due to a worsening real estate market. Currently, the company operates 115 directly-managed stores across one metropolitan area and five prefectures (Chiba, Saitama, Tokyo, Ibaraki, Gunma, and Tochigi), with planned store openings limited to delivery areas within two hours of the two distribution centers in Tsukubamirai City, Ibaraki Prefecture, and Hidaka City, Saitama Prefecture. If there is a shortage of suitable turnkey properties or a mismatch in rental terms, the company may be forced to revise its store opening plans, potentially preventing anticipated future increases in net sales.

There is a materializing risk of declining profitability due to intensifying competition and newly opened stores failing to meet business plans, along with a latent risk of declines in the market value of land and other assets due to changes in the real estate market. The company conducts impairment assessments by grouping stores individually, and if any store's operating income significantly deviates downward from its business plan, an impairment loss may be recorded, affecting business performance. The company aims to maintain profitability through thorough low-cost operations and the introduction of original products and JV products.

The company aims to achieve high gross margins through the development of new private-brand (PB) products via outsourcing and M&A, centered on "Shonizawa no Tennensui" (Shonizawa Natural Water) manufactured by the consolidated subsidiary Shonizawa Beverage Co., Ltd.; however, there is a latent risk of production halts due to unforeseen circumstances, as well as poor sales performance or increased dependency on PB products. The company addresses this through thorough regular maintenance of manufacturing equipment and enhanced information gathering on new PB products; however, if a production halt occurs, it could result in lost sales opportunities at "Jason" stores and affect business performance.

The company develops in-house systems such as the automatic product replenishment ordering system "JIOS" and JPOS registers; however, there is a latent risk that network disruptions caused by cyberattacks such as ransomware, unauthorized access, or employee error could impair store operations and prevent maintenance of in-house IT systems. The company has implemented security measures such as strengthened daily monitoring and backup systems; however, if unforeseen circumstances such as a system outage occur, substantial IT investment or high maintenance costs may be incurred, potentially forcing changes to the management strategy premised on IT cost reduction.

Changes in the employment environment within the retail industry present a latent risk that securing capable personnel, including part-time employees, will become more difficult, potentially preventing the company from securing the workforce needed to expand its business scale. The company is addressing this through improved compensation via wage increases and diverse recruitment activities including mid-career hiring; however, if new graduate hiring plans are not met or capable employees involved in product procurement resign, this could increase recruitment costs and stall product procurement, affecting business performance.

Rising import costs stemming from the prolonged weak yen and other factors have driven up electricity and fuel costs, creating a materializing risk that it will become more difficult to maintain the low-cost management that is a strength of the company group. The company is addressing this through thorough energy conservation at stores, review of electricity unit prices, and enhanced delivery efficiency in its in-house logistics; however, if import costs and energy costs rise further, this could directly reduce operating income and affect business performance.

Because the company concentrates its stores, distribution centers, and beverage manufacturing plant within one metropolitan area and five prefectures in the greater Tokyo region, there is a latent risk that store operations may have to be suspended if a large-scale natural disaster such as a major typhoon or torrential rain concentrates on the region. The company addresses this through property and casualty insurance; however, if a large-scale natural disaster occurs, it could result in temporary store closures, increased renovation costs, reduced product supply capacity due to suspended distribution center operations, and lost sales opportunities due to stockouts, potentially causing a significant decline in net sales.

More than 95% of "Jason" stores and distribution centers are leased properties, and if a lease is not renewed due to circumstances on the lessor's side, even a well-performing store may be forced to close, potentially reducing net sales. In addition, there is a latent risk that security deposits and guarantee deposits (construction cooperation funds), which are repaid in installments over a period of up to 20 years, may become unrecoverable due to the lessor's bankruptcy or other circumstances; in such cases, a bad debt loss may be recorded, affecting business performance.