United Super Markets Holdings Inc.

In the supermarket industry, competition for new store openings—including from other industries—is intensifying. If competing stores continue to open in the Group's dominant areas, this could adversely affect sales and business performance. Economic and personal consumption trends, as well as legal amendments such as those to the Consumption Tax Act, also affect business performance. Poor sales of seasonal products due to abnormal weather such as cool summers or prolonged rainfall are also risk factors for business performance and financial condition.

The Group is subject to a wide range of laws and regulations, including consumer protection laws, the Antimonopoly Act, large-scale retailer store opening regulations, various tax systems, and environmental/recycling-related laws. Although the Group has established internal systems aimed at legal compliance, there is a risk that business activities could be restricted, or personal consumption could deteriorate, due to unexpected new legal regulations or responses to legal amendments. Should such circumstances arise, they could affect business performance and financial condition.

The Group operates multiple stores, primarily supermarkets, and implements new store openings and closures in a planned manner. However, unexpected changes in the operating environment or changes in customer behavior due to competing facilities opening nearby may result in unplanned store openings or closures. Changes to plans resulting from such events could affect business performance and financial condition.

The Group works to prevent food poisoning, enhance food inspection systems, and clarify product traceability. However, in the unlikely event of an unexpected incident such as food poisoning or an event or accident that undermines product reliability, this could lead to customer attrition and loss of social trust, potentially having a significant impact on business performance and financial condition. This risk is fundamental to the food retail business, and continuous maintenance of management systems is required.

The Group's fundraising and interest burden are affected by future financial market trends and interest rate fluctuations. In a rising interest rate environment, increased borrowing costs could raise the financial burden, potentially adversely affecting business performance and financial condition. No specific countermeasures are described in the securities report.

Each company in the Group enters into a wide variety of contracts with suppliers, real estate lessors, and other business partners, and strives to build good relationships with them. However, should litigation arise with these parties due to various circumstances, litigation response costs and the occurrence of damages could affect business performance and financial condition.

The Group has built networks at stores, offices, and other locations to manage various corporate information, including sales, financial, and personal data. Although the Group has established internal information management regulations and implements strict information management, if information leakage or system destruction occurs due to criminal acts or network failures, this could disrupt business activities and result in a loss of social trust, potentially affecting business performance and financial condition.

The Group owns facilities such as stores, offices, food manufacturing plants, and distribution centers, and there is a risk that operations at these facilities could be disrupted by natural disasters such as earthquakes and floods, or by crime. Significant costs may be incurred to restore facilities and equipment, potentially affecting business performance and financial condition.

In the supermarket business, electricity for refrigerating and freezing products is essential, and rising fuel costs that increase electricity charges and delivery costs are a factor in increased expenses. The Group is considering the introduction and expanded use of renewable energy, as well as reviewing and developing new procurement routes, but rising costs could affect business performance and financial condition.

The Group holds fixed assets such as tangible fixed assets related to stores and goodwill, and opens new stores after thorough consideration and determination that investment can be recovered. However, the Group has recorded impairment losses on stores for which investment recovery is deemed unlikely due to subsequent rapid changes in the business environment, and if unintended rapid changes in the business environment occur in the future, the recording of impairment losses could affect financial condition and business performance.