ALBIS Co., Ltd.

In the event of food poisoning or other food safety issues, store sales may decline and corporate trust may deteriorate. Under its food safety policy, the Group performs quality checks at the time of product procurement, hygiene management based on HACCP standards at stores, and operates a food safety management system based on ISO standards at manufacturing subsidiaries. Should an incident occur, the Group will cooperate with public health centers to promptly investigate the cause and implement measures to prevent recurrence.

In the trading areas of the three Hokuriku prefectures as well as Aichi and Gifu prefectures, entries by convenience stores, drugstores, and other business formats have continued in addition to competing food supermarkets, and intensifying competition across business types and formats may lead to declining store sales and increased competitive costs. As a countermeasure, the Group is strengthening fresh, seasonal local produce and implementing sales promotions tailored to customer needs.

Under the policy of business expansion through active store openings and M&A, insufficient staffing and human resource development could hinder the business growth strategy and affect business performance. In particular, the development of highly specialized personnel and experienced store managers and department chiefs is a challenge, which the Group addresses through diverse recruitment of new graduates, mid-career, and specialized personnel, along with a grade-based education and training system.

Violations of laws and regulations such as the Food Sanitation Act, Food Labeling Act, Antimonopoly Act, JAS Act, Labor Standards Act, and work-style reform-related laws, or the revocation or non-renewal of permits and licenses, could restrict business activities and affect business performance. The Group has established an internal legal affairs department and a compliance committee, conducts regular training and ad hoc status reviews, and has a system in place to promptly convene the committee and implement recurrence prevention measures in the event of a violation.

The Group holds personal information from membership card holders and from applications for gifts and promotional events, and any leakage of such information could damage corporate trust and adversely affect business performance. The Group thoroughly implements regulations based on the Personal Information Protection Act, facility environment checks, and employee training, while also strengthening information system security through measures such as abolishing and digitizing membership application forms and tightening access controls.

Damage to information systems from natural disasters or accidents, or system failures caused by unauthorized access, could disrupt business operations and affect business performance. As countermeasures, the Group maintains a backup system, outsources critical systems to specialized vendors, and implements enhanced day-to-day operational management and appropriate security measures.

A deterioration in store profitability or a significant decline in the market value of held assets could result in the recognition of impairment losses, affecting business performance and financial position. Misjudged demand forecasts and changes in the competitive environment are assumed to be the main causes of profitability deterioration; the Group aims to identify causes early and formulate and implement improvement plans, and where improvement is not expected, it writes down the book value to the estimated recoverable amount.

With respect to deposits and guarantee money paid in connection with store openings, if all or part becomes uncollectible due to the bankruptcy of the recipient party or other reasons, the recognition of bad debt losses could affect the financial position. For recipients with large outstanding balances, the Group conducts regular financial condition surveys and secures collateral, managing the risk by setting an allowance for doubtful accounts based on estimated uncollectible amounts.

Due to the large volumes of electricity used at each store and at logistics and process centers, as well as the use of petroleum products such as trays and film, rises in crude oil prices and exchange rate fluctuations from yen depreciation could result in cost increases beyond expectations and affect business performance. In response to the recent sustained high level of electricity rates, the Group is promoting energy-saving measures such as visualizing electricity usage, optimizing set temperatures, and introducing solar power generation systems and LED lighting.

The Group raises funds from financial institutions for continuous capital investment, and a sharp rise in interest rates due to economic conditions, monetary policy, or overseas developments could result in a significant increase in interest expense, affecting business performance. The Group limits long-term borrowings solely to store-related capital expenditure funds and adopts a policy of procuring funds on favorable terms while monitoring interest rate trends, as well as managing capital investment plans to avoid excessive interest-bearing debt, thereby reducing this risk.