POPLAR Co.,Ltd.

The convenience store industry continues to experience overstore conditions, and the scope for new store openings is shrinking. Failure to achieve planned store openings, unexpected store closure costs, and disruption to product distribution caused by the collapse of dominant area formation may worsen business performance and financial condition. The Group addresses this through detailed prior review at executive meetings and the Board of Directors, improved planning accuracy after store openings/closings, and maintaining information on alternative delivery companies.

Increased cost burdens due to stricter regulations such as the Food Sanitation Act and environmental recycling-related laws, restrictions on business hours and store location, and rising logistics costs due to work-style reform-related legislation may adversely affect business performance and financial condition. The Group addresses this by strengthening its legal compliance system through internal rules, manual development, and employee training, as well as establishing routes for early collection of information on legal amendments.

If a cyberattack, virus infection, or internal system failure occurs, it could significantly affect store operations, product manufacturing, and product delivery operations, adversely affecting business performance and financial condition. The Group has established a system for minimizing recovery time in the event of information leaks or system failures through operation across multiple servers, regular backups, strengthened security tools, collaboration with system vendors, and the development of incident response manuals.

Deterioration in franchisee earnings due to the emergence of competitors, damage to brand image from accidents or scandals at stores, and litigation with franchisees may adversely affect business performance and financial condition. The Group addresses this by grasping franchisee management conditions through day-to-day management guidance and know-how transfer, and by building strong partnerships based on mutual prosperity and coexistence.

Since the Group raises funds through borrowings from financial institutions and lease contracts with leasing companies, a decline in creditworthiness that results in reduced or cancelled credit lines, or refusal of lease contracts, may adversely affect business performance and financial condition. The Group addresses this by maintaining creditworthiness through regular reporting of its management status to funding sources and by securing multiple funding sources.

Disruption to the function of supplying products to widely dispersed stores and business partners, human and physical damage at the Group's own factories and merchandise centers, and a decline in store visitor numbers or delays in store opening plans due to the spread of infectious diseases may worsen business performance and financial condition. The Group addresses this by establishing risk management rules and manuals, conducting employee training, developing multiple product supply bases, and preparing infectious disease guidelines and templates.

In addition to competition within the convenience store industry, cross-industry competition with food supermarkets, fast food, drugstores, and other formats is intensifying. If competitors surpass the Group in quality, price, or service, or if cost burdens increase, the Group's business performance and financial condition may deteriorate. As countermeasures, the Group conducts early collection of competitive information and business forecasting, and continuously develops proprietary products and services.

Prices of food ingredients used at the bento factories fluctuate due to commodity markets and exchange rate movements, and sharp increases in prices of raw materials and auxiliary materials such as containers lead to higher manufacturing costs and lower profit margins. There is also a risk of service disruption due to bankruptcy, business suspension, or termination of transactions by existing suppliers. The Group addresses this by continuously securing alternative and multiple suppliers for raw material categories with significant impact.

If it becomes difficult to secure the personnel necessary for store operations, bento factories, merchandise centers, and franchise management, the resulting increased burden on remaining employees, shortage of managers, and quality deterioration may adversely affect business performance and financial condition. The Group addresses this through enhanced recruitment management (strengthened recruiting activities, review of conditions, expansion of target candidates), measures to improve retention rates (enhanced benefits, harassment prevention, etc.), and by promoting DX and utilizing outsourcing.

If impairment processing becomes necessary due to deteriorating profitability of convenience store operations or worsening operating conditions at the Group's own factories and merchandise centers, business performance and financial condition may be adversely affected. The Group's policy is to make investment decisions only when future cash flow generation is expected, following review of business objectives, earnings forecasts, and the future environment.