Alleanza Holdings Co., Ltd.

There may be cases where it becomes difficult to secure store sites due to changes in economic conditions or new store openings by competitors. In addition, coordination with residents and local governments may become prolonged due to regulations such as the City Planning Act and the Large-Scale Retail Store Location Act, potentially increasing store opening costs. If store openings cannot be realized as planned, this may affect business results and financial condition.

Competition is intensifying not only with companies in the same industry but also with different business formats, and the expansion of store openings by competitors and changes in consumer purchasing behavior directly affect the Group's sales. Since the business model handles a wide variety of products, responding to changes in the competitive environment is key to maintaining business performance.

Disruptions to procurement routes and surges in raw material prices due to overseas conditions (natural disasters, conflicts, etc.) may affect business results. In particular, as the Group aims for a PB product sales composition ratio of 20%, if supply is disrupted or quality defects occur from overseas suppliers, there is a risk of returns, damages, and loss of credibility. Exchange rate fluctuations also affect the procurement costs of imported products.

Due to the declining birthrate and aging population and changes in employment conditions, there is a risk that the recruitment and development of excellent human resources necessary for business operations may not proceed as planned. For the Group, which is actively promoting store expansion and business growth, securing a stable workforce is essential, and a shortage of human resources directly affects business development and results.

Weather factors such as cool summers, extremely hot summers, warm winters, and unfavorable weekend weather may reduce demand for seasonal products, resulting in a risk of falling short of sales plans. Unpredictable weather conditions are increasing due to the effects of global warming, and the impact of climate change has already become apparent. Analysis and countermeasures in line with the TCFD framework are under consideration, but the impact on business results continues to exist.

There is a risk of system outages, information leaks, or data tampering affecting the network centered on core systems, caused by disasters, power outages, computer viruses, cyber terrorism, unauthorized access, and the like. Although appropriate security measures are implemented, if an event beyond the scope of prediction occurs, it may have a material impact on business results and financial condition.

Although M&A is positioned as an important management strategy, contingent liabilities or unrecognized liabilities may arise after acquisition even when thorough due diligence is conducted. In addition, if the synergies or business expansion effects originally anticipated are not achieved due to changes in economic conditions or the industry environment, there is a risk of adverse effects on business results.

In the current consolidated fiscal year, an impairment loss on fixed assets of ¥490 million was recorded, and additional impairment losses are expected to be recorded in the future if indications of impairment are recognized. In addition, goodwill of ¥1,261 million is recorded as of the end of the current consolidated fiscal year, and if the expected effects are not obtained due to changes in the business environment or competitive conditions, an impairment loss may occur and affect business results. There are also risks of losses on retirement of fixed assets and non-refund of deposits associated with store closures.

Due to substantial funding needs associated with store openings and renovations, the balance of interest-bearing debt at the end of the current consolidated fiscal year stood at a high level of ¥24,613 million (consolidated basis), with an interest-bearing debt ratio of 27.5%. Although funding efficiency is being pursued through overdraft agreements, syndicated loans, commitment lines, and other means, future changes in the financial environment or rises in market interest rates may increase financial costs and affect business results.

The Group holds personal information through its point card service, and while it has established a privacy policy and manages information through store manuals, if personal information is leaked for any reason, this may affect business results through loss of social credibility. In addition, if regulations such as the Act against Unjustifiable Premiums and Misleading Representations, the Food Sanitation Act, and environmental recycling-related laws are strengthened, there is a risk of increased costs for establishing systems and deterioration of business results due to food safety incidents.