WA, Inc.

The Group does not own its own production facilities and relies on overseas partner factories and trading companies for merchandise procurement, meaning exchange rate fluctuations directly affect procurement costs. Although forward exchange contracts have been introduced to stabilize import costs, sudden exchange rate fluctuations caused by overseas political and economic trends or currency policy could adversely affect business performance and financial condition. In addition, there is a coexisting risk of rising procurement costs due to increases in local labor costs and prices.

Women's footwear and apparel, the Group's main products, are highly trend-sensitive and seasonal, and are also susceptible to changes in climate and temperature. If the Group fails to adapt to changes in fashion trends and cannot provide products that meet consumer preferences, this could lead to a significant decline in sales. Continuous strengthening of product planning capability is essential to maintain consumer support.

Competition with other companies in the same industry is expected to intensify further due to the diversification of sales channels such as SNS and online sales. Responding to market competition with competitors may require price revisions and increased advertising expenses, potentially reducing sales share and profit margins. In particular, as EC channels expand, there is a risk of increasing price competition pressure.

Women's footwear and apparel are highly seasonal and trend-sensitive, and if initially projected demand is not realized due to changes in consumer demand, market conditions, or weather, there is a risk of excess inventory. Excess inventory can lead to reduced profit margins from discount sales and the recording of inventory valuation losses, potentially adversely affecting business performance and financial condition. The Group strives to maintain appropriate inventory levels and prevent stagnant inventory, but there are limits to what can be done in response to changes in the external environment.

The Group holds a substantial amount of personal information through sales activities such as internet transactions, and also manages trade secret information related to product planning and development. Although an information security management system has been established and operations are conducted with strict controls, in the event of an information leak or loss, loss of social trust could lead to a decline in sales or the incurrence of substantial costs due to damages, potentially adversely affecting business performance and financial condition.

The Group outsources warehouse and logistics operations related to merchandise procurement and shipping to specific external providers, and there is a risk that significant disruption to business operations could occur if the outsourcing partner changes its business policy, its financial condition deteriorates, or transaction terms change. Switching to an alternative provider would require considerable time and cost, so the impact on the entire supply chain would be significant. At present, no problems have arisen with the outsourcing partner.

The Group operates stores in station buildings such as Lumine and Atre, large shopping centers such as LaLaport and Aeon Mall, and department stores such as Mitsukoshi and Takashimaya, developing stable customer traffic and cost-effective sales promotion measures, but this has resulted in a concentration of store openings with specific commercial facility operators. If store openings do not proceed as planned due to changes in the environment surrounding these facilities, achieving the growth strategy may become difficult, potentially adversely affecting business performance and financial condition.

The Group positions securing and developing excellent human resources as its most important management resource for continuous business expansion and establishing a profit base, but if recruitment activities, education and training systems, and personnel systems do not function as planned, this could become a constraint on business expansion. A shortage of human resources could directly lead to a decline in store operation quality and delays in new store opening plans, potentially adversely affecting business performance and financial condition.

Women's footwear and apparel, as fashion items, are greatly affected by trends in personal consumption related to the economy. In an economic downturn, consumer purchasing intent declines, and if the Group cannot supply products in a timely manner in response to demand, this could adversely affect business performance and financial condition. While these products also have an aspect of being daily necessities, it should be noted that highly fashionable products are relatively more sensitive to economic conditions.

As the Group owns stores and distribution centers domestically and overseas and relies on overseas partner factories and trading companies for merchandise procurement, there is a risk that business activities could be suspended, distribution infrastructure disrupted, or facilities damaged due to natural disasters such as earthquakes, typhoons, and floods, the spread of infectious diseases, or illegal acts such as war or terrorism. The increasing frequency of extreme weather associated with climate change is also a concern, and if these factors overlap, significant disruption to business operations could occur, potentially adversely affecting business performance and financial condition.