YAMANO HOLDINGS CORPORATION

Kimono and jewelry products are high-priced items that are not necessities for customers, making them susceptible to demand contraction due to economic downturns. Changes in consumption trends and product trends, as well as loss of sales opportunities due to natural disasters such as typhoons and earthquakes, are also factors that could worsen business performance. As the industry is a mature one, it also carries the risk of structural demand contraction.

The Group conducts door-to-door sales of kimono, jewelry, health-related products, and other items, and is subject to regulation under the Act on Specified Commercial Transactions. Should future legal amendments strengthen door-to-door sales regulations, it may become impossible to maintain the efficiency of the household-visit sales system, which could adversely affect business performance. While the Group addresses this through thorough legal compliance, it may be difficult to respond to changes in the external environment.

The Group handles a large amount of customer information in the process of selling products and services, and there is a risk of information leakage due to cyberattacks or unauthorized access. Although the Group implements employee education and IT-based restrictions on viewing and outputting customer information, complete protection is difficult given the increasing sophistication of cyberattacks worldwide. Should an information leak occur, it could have a material impact on future business development, operating results, and financial condition.

The Group raises funds through interest-bearing debt such as bank borrowings, and is therefore affected by fluctuations in interest rate markets. In a rising interest rate environment, interest payment burdens increase, which could adversely affect business performance and financial condition. Fluctuations in financial markets overall could also affect the fundraising environment.

The Group positions business expansion through M&A as an important growth strategy, but even with thorough due diligence, contingent liabilities or unrecognized liabilities may arise after an acquisition. Goodwill arising from an acquisition must be amortized over the period during which the effect of excess earning power is estimated to manifest, and future goodwill amortization expenses may increase. If the performance of an acquired company deteriorates significantly, impairment processing will be required, which could have a material impact on the Group's business performance.

The Group operates retail stores across nearly the entire domestic market in Japan, and there is a risk that store closures could occur in the event of an infectious disease pandemic. Store closures directly lead to the loss of sales opportunities and could have a material impact on operating results. While having a nationwide store network provides some regional diversification effect, it becomes difficult to respond to a nationwide pandemic.