Mavvalu tokai co., Ltd.

The Company operates supermarket businesses centered on food products in Shizuoka, Aichi, Mie, Gifu, Shiga, Kanagawa, and Yamanashi prefectures, and operates in an environment susceptible to intensifying competition across industry and business format boundaries, as well as economic conditions, personal consumption trends, and abnormal weather. These changes in the external environment may directly affect business performance. As a countermeasure, the Company is addressing priority issues to respond to changes in lifestyle and the external environment.

The Company conducts in-store manufacturing in its fresh food and delicatessen departments, and its consolidated subsidiary Delica Foods Co., Ltd. (Consolidated Subsidiary) manufactures and sells prepared foods. If a quality incident such as improper use of ingredients or foreign matter contamination occurs unexpectedly, it could lead to a decline in social credibility and affect business performance and financial condition. As a countermeasure, the Company conducts employee training on hygiene management and food labeling, and has built a quality control system that enables rapid response in the event of an incident.

The Company continues to promote new store openings under its dominant area strategy, but there is a risk that store openings and profit generation may not proceed as planned due to intensifying competition and trends in consumer sentiment. In addition, many stores lease land and buildings, and there is a risk that operations may be forced to cease if agreement on renewal with the lessor cannot be reached upon expiration of the lease term. As a countermeasure, the Company conducts careful examination of projects through store development meetings and promotes standardization of store formats capable of responding to competitive and environmental changes.

The Company holds fixed assets such as tangible fixed assets related to stores and goodwill, and impairment losses may arise if the book value cannot be recovered due to a decline in store profitability or in the event of changes in accounting standards. A decline in the economic value of goodwill and other assets may also affect business performance and financial condition. As a countermeasure, the Company undertakes operational turnaround measures for assets showing signs of impairment and works to recover the amount invested.

As part of its dominant area strategy, the Company may acquire or invest in other companies within the same region, but if the expected synergy effects are not realized, it may affect business operations, performance, and financial condition. As a countermeasure, the Company conducts thorough due diligence on the target company's business, financial condition, and contracts when considering an acquisition or investment.

Due to the nature of its business, the Company is highly dependent on human resources, and there is a risk that the recruitment and development of talented personnel may not proceed as planned due to changes in demographic composition resulting from the declining birthrate and aging population. In addition, if employee-related expenses increase due to tightening labor supply and demand, it may affect business operations, performance, and financial condition. As a countermeasure, the Company is promoting efficiency improvements in existing operations, including active recruitment of new employees as well as multi-skilling, employee training, and labor-saving through equipment introduction.

The Company depends on information systems for store operations, merchandise procurement, and many other operations, and if a system failure occurs, it may affect business performance and financial condition. As a countermeasure, the Company has built a system to ensure the safety of its information systems through dual power sources and communication lines, construction of backup systems, unauthorized intrusion prevention measures, and outsourcing of operations to highly reliable external data centers.

The Company holds personal information obtained from customers of its retail business, and if it is leaked due to an unforeseen incident or accident, it may affect business performance and financial condition. As a countermeasure, in addition to establishing a personal information protection policy, developing internal regulations, and conducting employee training, the Company has obtained the Privacy Mark and introduced security equipment compliant with the Individual Number (My Number) Act.

The areas where the Company operates stores are included in the anticipated damage areas for the Tokai, Tonankai, and Nankai earthquakes, and if a large earthquake, tsunami, typhoon, or other natural disaster occurs, it may have a significant impact on business performance and financial condition. As a countermeasure, in addition to conducting regular drills utilizing a safety confirmation system, the Company conducts disaster prevention drills twice a year in coordination with AEON Group companies, building a business continuity and early recovery system.