Daiwa Co.,Ltd

The Company's corporate group, whose main segment is the Department Store Business, is exposed to changes in domestic economic and consumption trends as well as intensifying market competition with competitors that transcend industry boundaries. Customer needs are becoming more diverse due to the establishment of new lifestyles and the advance of the digital society, raising concerns about the impact on financial position, business performance, and cash flow. As countermeasures, the Company is promoting differentiation through "merchandise and planning," strengthening sales capabilities, and working to expand and deepen its customer base.

As customer needs diversify with the advance of the digital society, responding to digital strategies centered on Web business has become an important issue for business continuity. If the response to digitalization is delayed, it may adversely affect sales and profitability through customer attrition and a decline in competitiveness. The Company positions the promotion of digital strategies centered on Web business as a pillar for strengthening growth areas.

The Company is required to comply with a wide range of laws and regulations, including the Large-Scale Retail Store Location Law, the Antimonopoly Act, food safety management, consumer protection, and environmental recycling. If unforeseen circumstances arise, corporate activities may be restricted and management costs may increase. If a legal violation occurs, there are concerns about a material impact on financial position, business performance, and cash flow. As countermeasures, the Company thoroughly promotes compliance through the use of the "Daiwa Compliance Manual" and by regularly holding Compliance Committee meetings.

In the Department Store Business, which conducts operations through physical stores, there is a risk that store operations could be significantly disrupted in the event of natural disasters, accidents, or the spread of infectious diseases. A large-scale natural disaster or an outbreak of infectious disease could have a material impact on financial position, business performance, and cash flow through the suspension or reduction of business activities. The Company addresses this risk by establishing internal systems for emergencies and by developing educational systems to prevent accidents.

In conducting product transactions with consumers in the Department Store Business, if defective products or products that cause food poisoning or other defects are sold, the Company may be subject to public regulation and incur costs related to product liability and damages. Furthermore, a loss of consumer trust could lead to a decline in sales, potentially affecting financial position, business performance, and cash flow. As countermeasures, the Company conducts company-wide surveys and guidance by third-party organizations regarding "labeling" and "safety and hygiene," as well as regular training.

If unforeseen circumstances arise in the management of customer information, there are concerns about the impact on financial position, business performance, and cash flow, including costs arising from damages and a decline in sales due to loss of trust. The leakage of personal information could also damage the corporate brand and carries the risk of undermining the customer base. As countermeasures, the Company complies with the "Personal Information Protection Management Regulations" and related standards and manuals, thoroughly manages locking of storage, and conducts regular audits and self-inspections.