Joshin Denki Co.,Ltd.

If natural disasters such as earthquakes and heavy rain, or fires and accidents occur, store operations may be suspended and product supply may be disrupted due to damage suffered by business partners, potentially affecting the financial position and operating results. In the 2024 Noto Peninsula earthquake and heavy rains, stores actually suffered significant damage. The Company has developed a "Disaster Response Manual" and "Business Continuity Plan" and conducts regular drills to establish a system for early recovery.

If cyberattacks from within Japan or overseas cause system destruction or outages, or if unauthorized access results in the leakage of personal information or confidential information, this may lead to business suspension, delayed recovery, and a decline in social credibility, potentially affecting the financial position and operating results. The Company has built a cyber risk management system based on a zero-trust perspective, and continuously monitors all business terminals and servers with EDR/MDR to enable immediate detection and isolation of threats.

The Company holds a large volume of customer information through the issuance of point cards, and if information leakage occurs due to criminal activity or other causes, it may lead to a decline in social credibility and have a material impact on business operations. The Company operates the "Joshin Group Information Security Basic Policy," which combines physical, human, technical, and operational security measures based on its personal information protection policy and management standards, and was the first home appliance retailer to obtain and maintain Privacy Mark certification.

As of the end of the consolidated fiscal year under review, the Company held interest-bearing debt of ¥37,930 million, and there is a possibility that fund procurement under desired conditions may become difficult due to a contraction of financial markets or a decline in creditworthiness. In addition, rises in long-term and short-term interest rates directly affect the financial position and operating results through increased borrowing costs. The Company is establishing a system to respond quickly to changes in the financial environment by considering diverse fund procurement methods.

The balance of leasehold deposits and similar items related to store leases reached ¥12,686 million as of the end of the consolidated fiscal year under review, and there is a possibility that all or part of this amount may become uncollectible due to bankruptcy or other business failure of the lessor. In addition to maintaining good relationships with lessors to gather information on their business conditions, the Company is also working on early recovery through partial offset against rent and installment repayment.

Seasonal products such as refrigerators, air conditioners, and heaters are easily affected by summer and winter weather conditions, and demand for home appliances and information/communication equipment in general is also prone to fluctuation due to changes in the external environment such as social conditions. The Company is working to level out business performance through appeals for off-season purchase incentives and the holding of the "Dai-Sogyosai" (Grand Founding Anniversary Sale), as well as expanding profits and reducing expenses through active investment in M&A and the promotion of digital sales promotion.

If recruitment plans do not proceed as scheduled due to changes in population structure resulting from the declining birthrate and aging population, or if labor costs increase due to tightening labor supply and demand, this may hinder business activities including store operations and affect the financial position and operating results. In addition to diversifying employment through extended retirement age, mid-career hiring, re-employment after retirement, and hiring of part-time workers with shorter hours, the Company is promoting improved employee retention rates and skills development through the establishment of personnel evaluation systems and training programs.

The Company is subject to a wide range of legal regulations, including the Large-Scale Retail Store Location Act, the Antimonopoly Act, the Act against Unjustifiable Premiums and Misleading Representations, the Act against Delay in Payment of Subcontract Proceeds, the Act on Recycling of Specified Kinds of Home Appliances, and the Secondhand Articles Dealer Act, and if new laws are enacted or regulations are tightened or violated, this may restrict business activities and lead to a decline in social credibility. The Company maintains a legal compliance system through the establishment of a Sustainability Committee, the development of the "Joshin Group Code of Conduct," regular employee training, and the holding of legal consultation sessions by retained attorneys.

If suitable properties meeting store opening conditions cannot be found, or if changes in customer trends occur due to the opening of competing commercial facilities, this may lead to changes in store opening plans or deterioration in the profitability of existing stores. The number of stores as of the end of the consolidated fiscal year under review reached 217, and the book value of fixed assets related to stores reached ¥63,872 million; in the event of business downsizing or closure, it may be necessary to recognize impairment losses or provisions for store closure losses. The Company is working to strengthen its revenue base through dominant strategies centered on the Kansai region as well as the Tokai, Kanto, and Hokushinetsu areas, and through the renewal of existing stores and scrap-and-build measures.

Due to rising logistics costs and a shortage of delivery drivers, there is a possibility that the Company may not be able to build a delivery network in time to respond to increasing orders, particularly for the EC business "Joshin Web Shop," and deterioration in the business condition of outsourcing partners or changes in transaction terms may also affect the financial position and operating results. With the opening of the Kansai Ibaraki Logistics Center, the Company has realized a multi-type warehouse incorporating both TC and DC functions, and is promoting labor saving and efficiency through the active introduction of material handling equipment, while also working to expand the functions of the Tokyo Logistics Center.