Seven & i Holdings Co., Ltd.

If violations of the Food Labeling Act or deficiencies in food hygiene management occur, this could lead to a loss of customer trust, product recalls, and compensation costs, potentially affecting business performance and financial condition. With the expansion of original products such as Seven Premium, the importance of quality control is further increasing. As countermeasures, the Group conducts joint quality control with business partners, HACCP training, and internal and external audits of manufacturing plants.

A large-scale earthquake occurring in a major metropolitan area where stores of the Group's main businesses are concentrated could disrupt the supply chain, halt business activities, and incur substantial costs for facility repairs, potentially having a material impact on business performance and financial condition. As a retailer that serves as part of society's lifeline infrastructure, a prolonged recovery of business activities also carries the risk of failing to fulfill its role as social infrastructure. As countermeasures, the Group develops and updates its BCP and BCM, conducts large-scale disaster response drills, and builds cooperative frameworks with Group companies.

The sophistication and increasing complexity of attack methods, such as targeted emails, ransomware, and DDoS attacks, create risks of customer data leaks or system outages. Because a broad range of business infrastructure, including financial and payment-related systems, could be targeted, the potential impact on business performance and financial condition could be substantial. As countermeasures, the Group has established a monitoring framework through the 7&i CSIRT and SOC, conducts vulnerability assessments, and provides targeted-email training for all employees.

In the process of executing the growth strategy aimed at becoming a world-leading retail group centered on food, inappropriate allocation of management resources or stagnation in the domestic and overseas convenience store business strategies could affect business performance and financial condition. The effectiveness of management is ensured through progress monitoring of the Group's priority strategies by the Board of Directors, a majority of whom are independent outside directors, as well as the separation of the roles of Chairman of the Board and CEO.

In strategic investments such as M&A for business expansion, insufficient due diligence or failure of PMI (post-merger integration) may prevent the realization of anticipated synergies, potentially resulting in impairment losses. In addition, if a TOB (tender offer bid) that undermines the Company's corporate value were to succeed, there is a risk of confusion arising from changes to management policy and corporate culture, as well as from the integration of business processes. As countermeasures, the Group ensures thorough due diligence at the time of acquisition, conducts regular monitoring of the integration process, and formulates policies for responding to acquisitions.

Fluctuations in foreign exchange rates may affect business performance and financial condition due to the translation into yen of local-currency-denominated assets and liabilities of overseas group companies, as well as the existence of overseas-developed products affected by exchange rate movements. Interest rate fluctuations also affect interest income and expenses and the value of financial assets and liabilities. As countermeasures, the Group utilizes derivative transactions such as forward exchange contracts and swaps, along with continuous monitoring.

Tangible fixed assets and goodwill account for a large proportion of consolidated total assets, and a decline in the profitability of stores or a significant drop in the market value of held assets could necessitate impairment processing, potentially having a material impact on business performance and financial condition. In particular, the North America Convenience Store Business (7-Eleven, Inc.), which continues to make large-scale investments through M&A, carries a large amount of goodwill. As countermeasures, the Group sets store opening screening criteria and conducts regular monitoring, and sets asset purchase criteria along with regular monitoring of market prices.

The intensification of natural disasters caused by climate change could damage stores and logistics networks, while stricter greenhouse gas emission regulations and the introduction of new laws and regulations such as carbon taxes could increase compliance costs and restrict business activities. There is also a risk that the deterioration of natural capital and loss of biodiversity could reduce agricultural production volumes and drive up prices, making raw material procurement more difficult. As countermeasures, the Group is promoting TCFD and TNFD scenario analysis based on the environmental declaration

Climate change may reduce the yield and quality of agricultural, livestock, and marine products, and rising fuel costs and labor shortages among delivery contractors in logistics could disrupt procurement routes. In the future, there is also a risk that rising energy prices could spill over into procurement prices, potentially affecting business performance and financial condition. As countermeasures, the Group is securing alternative energy sources and equipment, diversifying suppliers, improving the efficiency of logistics costs, and strengthening collaboration with delivery contractors.

In countries where regulations on the sale of gasoline-powered vehicles and the shift toward EVs and other alternatives are progressing, gasoline sales revenue may decline in the future, and customer traffic to stores with attached gas stations may also decrease. In the North America Convenience Store Business (7-Eleven, Inc.), gasoline sales are an important source of revenue, and there is a risk of costs arising from business model revisions and the installation of additional EV charging equipment. As countermeasures, the Group is pursuing strategic business reviews in response to changes in the business environment and responding to relevant laws and regulations.