LIFE CORPORATION

With a total of 314 stores comprising 144 stores in the Greater Tokyo area and 170 stores in the Kinki region, changes in economic conditions, personal consumption trends, commodity prices, and the competitive landscape may affect business performance. Competition is intensifying not only with same-industry competitors but also with different industries, and there are concerns that new store openings by competitors could impact the performance of affected stores. In response, under the "Seventh Medium-Term Management Plan," the company is promoting agile policy changes based on customer data analysis and advancing dominant strategies in the two major metropolitan areas.

Rising material prices and continued labor shortages have led to increased construction costs and extended construction periods, and rental cost increases due to soaring land prices in the two major metropolitan areas may continue. These cost increases could adversely affect revenue plans for new store openings and renovations, posing a risk of pressure on the profit structure. In response, the company is working to build a profit structure resilient to cost increases through the effective introduction and use of systems, including AI, and by improving store operational efficiency and productivity.

Food safety incidents such as food poisoning could result in health damage to customers, loss of trust, and additional costs, and force majeure events such as foot-and-mouth disease, avian influenza, and African swine fever could disrupt product supply. As the company handles a wide range of products including fresh, processed, and daily delivered foods, the scope of potential impact is broad. The company addresses this through an enhanced inspection system and hygiene checks centered on the Quality Assurance Department, acquisition of international certifications at each center, HACCP-compliant management, and clarified traceability.

Progressing global warming is expected to reduce the supply of agricultural, marine, and livestock products, raise raw material prices, and increase store energy costs, while changes in environmental laws, tax systems, and energy policy may increase various levies and store operating expenses. The company is working to reduce greenhouse gas emissions and environmental impact through the introduction of energy-saving and fluorocarbon-free refrigeration and freezer cases, and the installation of the industry's largest biogas power generation facility at the Tenpozan Process Center.

Various disasters such as earthquakes and typhoons could cause greater-than-expected damage to stores, process centers, distribution centers, information systems, online business operations, and business partners involved in procurement and logistics. As the company is strongly required to maintain business continuity as part of the social infrastructure supporting food supply, the impact could be severe if damage extends over a wide area. The company responds through the development of disaster response manuals, installation of private power generation at distribution and process centers, and the establishment of a company-wide support system.

Improving economic conditions have intensified competition for human resources with other industries, making it difficult to secure the necessary personnel, including part-time workers who are central to store operations, and labor costs may continue to rise. A shortage of human resources is a risk directly linked to the quality and stability of store operations. The company addresses this through active recruitment of part-time workers, use of an enhanced support package addressing the "annual income wall," strengthened new graduate and mid-career hiring, reduced turnover through improved working conditions and enhanced training, and productivity improvements through system introduction and use of process centers.

In addition to severe equipment damage from natural disasters or accidents, cyberattacks such as unauthorized intrusion by computer viruses, or system failures caused by employee error, could occur, potentially leading to a broad suspension of operations including store operations, online business, and logistics. The company minimizes downtime in the event of a failure by installing key equipment for core systems in areas with low disaster risk, maintaining 24-hour outsourced monitoring, and ensuring redundancy across systems.

In addition to customer personal information obtained through point cards and various credit cards, the company holds personal information of business partners and employees, and there is a risk of information leakage due to human management errors or unauthorized external access. In the event of a leak, there are concerns about loss of social trust and the occurrence of legal liability and response costs. The company responds through the establishment of personal information management regulations, the establishment of the information security specialist organization "LIFE-CSIRT," implementation of security education and training, and continuous system-based checks.

As of February 28, 2025, the company held interest-bearing debt of ¥71.0 billion (¥71,000 million), and depending on future interest rate and financial market trends, procurement costs may rise or difficulties in fund procurement may arise. In a rising interest rate environment, increased financial expenses pose a risk of pressure on profits. In addition to continuous efforts to optimize the amount of interest-bearing debt, the company is implementing measures to reduce interest rate risk, such as fixed-rate borrowing, while also pursuing procurement at lower interest rates.

The company holds numerous fixed assets such as stores and land and applies impairment accounting; if it is determined that investment recovery cannot be expected within a certain period due to changes in the economic environment or competitive conditions, impairment losses may occur. As the company continues to expand its multi-store operations, an increase in unprofitable stores could have a cumulative impact on its finances. The company has established a system to detect early signs of impairment through regular reviews of store profit and loss status and the implementation of individual profitability improvement measures for stores with deteriorating profitability.