PLANT Co.,Ltd.

In recent years, competing stores of various business formats have been opening, and the competitive environment is becoming increasingly severe. New store openings by competitors and further intensification of price competition may affect the Company's business performance. The Company responds through community-focused store development offering low prices and a wide selection of daily necessities, but maintaining differentiation remains a challenge.

The Company's business model is centered on physical stores, and there is a risk that the rapid expansion of the EC market could threaten its business foundation. Although the Company has begun online sales and is working to capture demand, if the outflow of consumers to leading competitors and internet-only companies continues, the Company may fail to capture demand in the expanding EC market, which could affect its business performance.

The Company's store openings are subject to regulation under the "Amended Three City Planning Laws" (the Large-Scale Retail Store Location Act, the City Planning Act, and the Act on Vitalization of City Centers), and new store openings may require significant time and expense. If stores cannot be opened as planned, business performance may be affected. In addition, if violations of the Product Liability Act, the Antimonopoly Act, consumer-related laws, environmental protection laws, or similar regulations occur, there is a risk of decreased sales and increased costs due to damage to the Company's corporate image.

The Company operates stores widely across Japan, and in the event of a large-scale natural disaster such as a major earthquake or heavy rainfall, there is a risk of store damage, road disruption, logistics stoppage, damage to fixed assets and inventory, and business suspension. In addition, since most store operations depend on electricity, if an unexpected power outage or equipment damage continues for an extended period, it may cause significant disruption to operations and affect business performance.

If a global pandemic of an infectious disease such as COVID-19 were to occur again, there is a risk of disruption to logistics systems and store operations. This could affect the Company's business performance, including through expanded human casualties, and could become a situation that tests the effectiveness of the Company's business continuity plan.

The Company's fundraising primarily relies on borrowings from financial institutions, with an outstanding loan balance of ¥5,520 million at the end of the current fiscal year. The borrowings are subject to financial covenants related to the maintenance of net assets and profit, and if the specified levels are not achieved, the Company may lose the benefit of the term and be required to make immediate repayment. In addition, if borrowing becomes difficult due to turmoil in financial markets, deteriorating business performance, or a decline in creditworthiness, there is a risk of significant impact on the Company's cash flow.

If the value of fixed assets owned by the Company declines significantly in the future, or if the profitability of stores and other assets deteriorates, impairment losses on fixed assets may need to be recognized. The recognition of impairment losses poses a risk of directly affecting the Company's business performance, and could particularly be triggered by changes in store opening strategy or a worsening competitive environment.

If unauthorized intrusion or unauthorized access from outside causes system delays or service outages, business operations may be disrupted. In addition, if personal information were to be leaked, there is a risk of reduced social credibility and damages liability. The Company obtained Privacy Mark certification in August 2022 and has strengthened its personal information management system, but it recognizes response to cyberattacks as a material risk that could affect corporate management itself.

The Company operates its fresh food departments—including fresh fish, meat, and bakery—in-house, making it essential to secure and train personnel with a certain level of skill. In addition, the sale of pharmaceuticals legally requires the assignment of pharmacists and registered sellers of pharmaceuticals, and if the required number of such personnel falls below the prescribed level, pharmaceutical sales will become impossible. If skilled personnel or qualified staff resign or become difficult to secure, this may affect store operations and business performance.

If food poisoning or mislabeling of place of origin occurs, it may affect store operations and business performance due to damage to the Company's corporate image. In addition, if an accident or lawsuit arises from a private brand (PB) product, there is a risk of unexpected costs such as damages liability. The Company conducts hygiene management guidance through its Quality Control Room, Fresh Keeper system, and specialized consultants, and strictly manages the quality and labeling of PB products, but it is difficult to completely eliminate such risks.