WACOAL HOLDINGS CORP.

The decline in large-scale retail stores such as department stores and mass merchandisers, along with sales floor reductions, may have a material impact on the Group's performance, given its high dependence on these channels. As countermeasures, the Group is promoting EC business expansion (opening stores on existing and new platforms) and the development of the OMO-type store "WACOAL is," while also building a demand-linked production system to reduce lost sales opportunities caused by stockouts.

Structural changes in the supply chain, including rising raw material prices, increasing labor costs in production locations, and higher transportation costs, may raise procurement prices and affect business performance. The Group is pursuing cost reduction measures such as expanding the proportion of sourcing and production in ASEAN, reducing material varieties through consolidation of materials and colors, improving production efficiency through the introduction of labor-saving equipment, and expanding production lots through brand reorganization.

If core systems or web sales sites are disrupted due to cyberattacks (such as ransomware), system development errors or delays, or natural disasters, business continuity may become difficult and the Group could lose the trust of stakeholders. The Group has established an "Information Security Subcommittee" and is continuously working to improve its response, including identifying and monitoring externally exposed IT assets, deploying multilingual training tools, and establishing cyber incident response procedures.

Intensifying competition in domestic and overseas markets, the spread of low-priced products, and new entrants from other industries may lead to a decline in brand recall and recognition rates and loss of sales share, potentially resulting in a long-term decline in business performance. As countermeasures, the Group is combining Wacoal's strengths—its customer database, body-shape research, and manufacturing technology—with digital technology to strengthen the senior, high-correction, and premium-price segments, as well as improve SKU efficiency and expand EC in each overseas region.

If brand strategy, products, and services fail to respond to changes in consumer values, this may result in failure to acquire younger customers and the loss of existing customers, damaging brand value. The Group is working to strengthen relationships with customers through deepening customer experience using the 3D Measurement Service "SCANBE," launching a "reserve and order" service via its own EC, and large-scale promotions for Conditioning Wear (CW-X).

Amid a shrinking domestic market due to population decline and the falling birthrate combined with an aging population, the Group is pursuing overseas market development and new business format expansion; however, if it fails to meet diversifying consumer needs and these plans do not achieve their expected results, this may affect Group performance. In Japan, the Group is strengthening personalized customer experiences using digital technology, while in Europe, the United States, and China it is accelerating the shift to an EC-focused business model and investment in digital marketing.

If leakage or loss of confidential information or personal data occurs, it may result in significant losses such as a loss of social trust or suspension of business operations. In particular, as the handling of personal information increases with digital customer strategies and the strengthening of the EC business, the Group continuously conducts management status surveys, guidance, and advice for domestic and overseas affiliated companies through its "Information Security Subcommittee."

A decline in the market value of held listed shares and bonds, or a rise in interest rates, may cause impairment of intangible assets (goodwill and trademark rights), while a decline in the valuation of pension assets or a shortfall in funding may require additional contributions or provisions, potentially affecting business performance. Regarding cross-shareholdings, the Group has set a policy to reduce holdings by approximately ¥20.0 billion (market value as of the end of March 2026) by the end of FY2029 (ending March 2029), bringing the ratio to consolidated net assets below 15%, and has established a Pension Committee that manages asset investment in cooperation with an external investment consulting firm.

Allegations of human rights, labor, or environmental issues in the supply chain, as well as compliance violations or inappropriate statements on social media, may result in a loss of social trust and adversely affect business performance. In the past, there have been instances of labor and human rights issues being raised at overseas sewing factories, as well as the discovery of unpaid overtime allowances for foreign technical intern trainees in Japan. Currently, the Group is conducting on-site audits and corrective monitoring through its "CSR Procurement Subcommittee" and expanding employee training and internal reporting systems through its "Compliance Subcommittee."

In addition to infringement of intellectual property rights by other companies or by the Company itself, the spread of "impersonation" advertisements and fake websites falsely claiming to be the Company's brands, mainly on social media, may result in a loss of trust among consumers and the market as well as economic losses. The Group is promoting intellectual property protection through sales channel tracking, monitoring, and elimination measures in cooperation with the Kyoto Prefectural Police, collaborative efforts with other companies affected by similar damage to lobby social media operators and the government, and strengthened cooperation with external experts.