Kojima Co.,Ltd.

In the home appliance retail industry, competition among companies through low-price sales is intensifying, and combined with sluggish consumer spending, this may affect the Company's business performance. The Company is implementing measures to strengthen its sales capabilities, such as continuous profitability improvement initiatives and enhanced lifestyle proposal capabilities, but there is no guarantee that deterioration in the competitive environment can be completely avoided.

If demand for seasonal products declines significantly due to abnormal weather such as cool summers or warm winters, this may affect the Company's business performance. In addition, if demand changes exceed expectations, excess inventory may result, which could have a material impact on the Company's financial position and business results. The Company is working to reduce the impact of seasonal fluctuations by strengthening its private brand through collaboration with Bic Camera and pursuing specialization to develop new customers.

Under the Act against Unjustifiable Premiums and Misleading Representations, a surcharge system has been established that collects 3% of sales for representations that mislead consumers into believing a product is of superior quality or more advantageous than it actually is, and from October 2024, criminal penalties (fines of up to ¥1 million) will also apply to intentional violations. If a violation occurs due to an employee's error, this may affect the Company's financial position and business results. The Company is working to build a system to prevent unfair representations through the development of internal regulations, the implementation of educational training sessions, and the establishment of an internal qualification system.

If a violation of the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors is recognized, the Company may be subject to recommendations and public disclosure of its company name by the Japan Fair Trade Commission, as well as criminal penalties (fines of up to ¥500,000), which could lead to a loss of trust among consumers and business partners. On January 1, 2026, an amended law will come into effect, which is expected to add employee headcount criteria and expand the scope of application to include "specified transport consignment" transactions, potentially incurring response costs. The Company is working to build a system to prevent violations, including through educational training sessions that take into account recommendation cases involving other companies.

Tax reforms, including consumption tax rate increases, and reviews of the social security system may lead to a decline in sales due to a slowdown in personal consumption and cost burdens associated with responding to system changes, which may affect business performance and financial position.

The Company holds a large amount of personal information, including Kojima Point Card member information and internet mail-order customer information. If an information leak occurs due to an unforeseen event, this may result in a loss of social credibility and liability for damages, which may affect business performance and financial position. The Company is working to strengthen its protection and management system by obtaining the Privacy Mark, responding to the amended Act on the Protection of Personal Information (April 2022), and developing internal regulations and implementing safety management measures.

The Company holds fixed assets such as store equipment, and if store profitability deteriorates due to changes in the business environment, it may be necessary to recognize impairment losses, which may affect business results and financial position. The Company is working to improve store profitability by expanding new product categories (bicycles, alcoholic beverages, toys, etc.) leveraging the specialization of the Bic Camera Group and by responding promptly to customer needs.

The Company sometimes leases store sites and equipment, and if the corporation or individual that owns the land or other property falls into bankruptcy or a similar state, continued use may become difficult, which may affect business performance and financial position. The Company confirms the rights relationships of target properties at the time of store opening, but this risk cannot be completely eliminated.

If large-scale earthquakes, typhoons, or other natural disasters, fire accidents, nuclear power plant accidents, infectious diseases, or other events occur, physical and human damage may occur at stores and other facilities, and there is also the possibility of suspension or delay of product supply from business partners, or price increases. As a result, sales may decline due to restrictions on business activities, and costs may be incurred for facility restoration and compensation for damages, which may affect business performance and financial position.

The Company receives rebates based on contracts with suppliers according to purchase performance, but if there are fluctuations in purchase performance or changes in transaction terms, this may have a material impact on the Company's financial position and business results. There is also a risk that instability in product supply due to global shortages of resources and materials may disrupt merchandise procurement. The Company strives to maintain good relationships with each supplier and to secure a stable volume of purchases through sales measures such as the vertical launch of new products.