Mr Max Holdings Ltd.

Against a backdrop of declining working-age population due to the falling birthrate and aging society, changes in laws and systems may increase the cost of recruiting personnel, and human resource development may not proceed as planned. This could affect service provision and business operations at multiple stores and logistics centers in the Kanto, Chugoku, and Kyushu areas, and could also hinder human capital investment plans for new store openings and new businesses, potentially affecting operating results and financial condition. As countermeasures, the Company promotes appropriate labor management, including supporting the development of diverse personnel, reducing long working hours, and encouraging the use of paid leave.

If unexpected events such as foreign object contamination in food or a decline in safety occur during the manufacturing process or quality control of Private brand (PB) products, this could result in significant costs for product recalls and compensation. In addition, a decline in trust from customers and the market could undermine the competitiveness and advantage of products, potentially affecting business performance. As countermeasures, the Company has established selection criteria for manufacturing contractors, built an inspection and checking system based on safety standards, and provides ongoing quality control education for responsible personnel.

In the course of business operations, the Company holds personal information entrusted by customers, and information leakage could occur due to external cyberattacks, internal negligence or theft, or intentional actions by officers or employees. If such an event occurs, it could affect business performance through loss of trust, incurrence of damage compensation costs, and business suspension. As countermeasures, the Company has established a privacy policy, implements employee training, and monitors the information security level of business partners, including outsourcing contractors.

If natural disasters such as earthquakes, typhoons, or tsunamis, or fires, power outages, or unexpected accidents occur at the head office, stores, or logistics centers, human casualties, damage to facilities and equipment, or IT system outages could occur. This could disrupt business operations and affect operating results and financial condition. As countermeasures, the Company has formulated a Business Continuity Plan (BCP), reviewed initial response flows, conducts regular drills and stockpiling measures, and strengthens its systems through a continuous PDCA cycle.

As the Company operates numerous IT systems, system failures or security incidents could occur due to natural disasters, cloud service outages, sophisticated cyberattacks (such as targeted emails, ransomware, and unauthorized access), or human error. If such events materialize, they could disrupt business operations and affect business performance and financial condition. As countermeasures, the Company is strengthening measures based on its basic information security policy and regulations, developing a management system to prevent improper internal use, and establishing standards for the use of external platforms while enhancing its monitoring system.

As a transition risk associated with climate change, strengthened decarbonization policies or unexpected short-term revisions to carbon emission-related laws and regulations could increase compliance-related expenditures or impose restrictions on business activities. In addition, insufficient environmental and human rights response across the entire value chain could damage social trust and affect business performance and financial condition. As countermeasures, the Company has identified seven materiality issues based on its basic sustainability policy, oversees management through its Sustainability Committee, and promotes information disclosure in line with TCFD recommendations.

As the e-commerce market expands, competitors are increasingly focusing on their e-commerce services, and market competition may intensify. In addition, if changes in the external environment, such as amendments to laws and regulations, make it difficult to achieve differentiation and operational efficiency through the use of digital technology, this could affect e-commerce service provision, business operations, and financial condition. As countermeasures, the Company is promoting an omnichannel strategy integrating stores, apps, online stores, and online supermarkets, developing DX talent, and establishing a low-cost operating system through standardization of business processes.

While operating 57 stores in the Kyushu, Chugoku, and Kanto regions, competition may intensify due to competition with specialty stores, major supermarkets, home centers, drugstores, and new store openings by other business formats. Changes in personal consumption trends, and changes in the economic, employment, and demographic conditions in store locations, could cause merchandise sales revenue and shopping center tenant leasing income to fall short of plans, forcing changes to store opening plans and potentially affecting operating results and financial condition. As countermeasures, the Company is working to improve the accuracy of sales forecasting using technology, developing a budget-to-actual management system, and pursuing store development that responds to social change.

There are numerous relevant laws and regulations that must be complied with in each business area, and insufficient response to changes in or strengthening of laws and regulations could affect business activities, social credibility, and operating results. In addition, if domestic or overseas business activities become subject to significant litigation, this could affect operating results and financial condition. As countermeasures, the Company has organized a Compliance Committee, identifies compliance risks through risk management activities, and implements the development of internal regulations and employee training.

The Company conducts business with numerous related business operators in areas such as Shopping center operation & real estate leasing and the discount store business, and if a business partner goes bankrupt or withdraws from business, resulting in a suspension of service supply, this could cause problems in business operations. In addition, if domestic or overseas business activities become subject to significant litigation, this could affect operating results and financial condition. As countermeasures, the Company has established and operates internal regulations for the selection and management of business partners, and reduces litigation risk by establishing a legal check system utilizing retained legal counsel and others.