yutori, Inc.

The apparel and accessories business, centered on street brands, is highly susceptible to trends. If the company is slow to respond to changes in customer preferences arising from lifestyle changes due to infectious disease outbreaks or intensified competition from new entrants, business performance may deteriorate. As countermeasures, the company continues trend research focused on the target demographics of each brand, and is expanding its customer base by developing new sales channels utilizing Physical Stores (Offline Sales).

The apparel retail market is in a state of fierce competition with domestic and overseas competitors, and failures in product planning or the obsolescence of brand value may affect operating results. In addition, changes in usage trends of SNS, a key marketing tool, or changes in laws and regulations could also affect the business and performance. As countermeasures, the company is collecting information on customer preferences through stores, its in-house EC platform, and SNS, and is pursuing agile product rollouts and faster development of new brands.

The company positions M&A as an important means of expanding its business and improving profitability; however, if the performance of an acquired company does not proceed as planned due to significant changes in the business environment or other factors, there is a risk that the investment funds may not be recovered. In addition, the company has recorded substantial goodwill in connection with acquisitions, and if the expected results are not achieved, the recognition of impairment losses could affect its business performance and financial position. The company seeks to mitigate this risk by conducting prior investigations of the financial condition of target companies and examining potential synergies and the feasibility of investment recovery.

ZOZO, Inc. is the company's second-largest shareholder by voting rights ratio (16.8%), and ZOZO's exercise of voting rights on important matters such as amendments to the articles of incorporation, appointment/dismissal of officers, and organizational restructuring may affect the company's decision-making. In addition, if changes in ZOZO's management policy or deterioration in its management condition affect the trading relationship, there is a risk that this could affect the company's financial position and operating results. The company has established a system with one independent outside director and three independent outside auditors, and transactions with ZOZOTOWN are deliberated and resolved by the Board of Directors in accordance with the related party transaction management regulations.

If inadequate inspection or product management results in the sale of inappropriate products, in addition to damage to brand image, the company may be required to pay compensation or penalties to business partners, commercial facilities where stores are located, and other parties, which could affect the business and performance. The company seeks to mitigate this risk by including pre-delivery inspection clauses and quality assurance clauses in contracts with production subcontractors.

Representative Director and President Takanobu Kataishi plays a central role in business operations, primarily through decisions on management policy and formulation of business strategy, and if he becomes unable to perform his duties for any reason, this may affect operating results and financial position. The company has received a debt guarantee from him for a real estate lease agreement, and intends to resolve this through ongoing negotiations with the lessor. The company is working to build a system that eliminates excessive dependence on specific officers and employees through the recruitment of external talent and the development of internal human resources.

Employee contributions are the most significant factor in brand development, operations, and product planning and development, and if the company is unable to secure the necessary personnel due to intensifying competition for hiring or employee turnover, this may affect performance and financial position. The company is working to secure human resources and curb attrition through the promotion of discretion-based work styles and initiatives to improve employee engagement.

Many of the company's products are manufactured at factories in China, and if the supply chain becomes unstable due to the materialization of political or geopolitical risks, or policies related to infectious diseases, this may affect performance and financial position. At present, specific details of diversification measures have not been disclosed, but the company recognizes and manages this as a risk.

If posts on SNS by official brand accounts, internally managed personal accounts, or external influencers violate advertising-related laws and regulations, or are regarded as stealth marketing, brand image may be damaged, which could affect performance and financial position. As a countermeasure, the company has established

While most of the company's products are procured from domestic suppliers, because those suppliers import from overseas production factories, fluctuations in exchange rates may affect performance through changes in procurement prices. As countermeasures, the company is strengthening its price negotiation capabilities by consolidating suppliers and striving to plan attractive products that can withstand price increases.