JUNTENDO CO.,LTD.

The company operates in the Chugoku and Kinki regions, developing stores ranging from 300-tsubo to 1,000-tsubo formats. Changes in the economic environment and the moves of competitors may affect store opening policy and business performance. While the company is pursuing a dominant-area strategy, overstore conditions have arisen in some regions within its operating area. In response, the company continues to strengthen its trading areas through active store openings and renewals.

Stores with a sales floor area exceeding 1,000㎡ are subject to environmental and other regulations under the Large-Scale Retail Store Location Law, and if such regulations cannot be cleared, store openings may not be possible. Compliance with these regulations may lead to schedule delays or increased cost burdens. The company operates stores ranging from 300-tsubo to 1,000-tsubo formats, and those exceeding 1,000㎡ in floor area are subject to this law.

Home centers handle products subject to legal regulation, such as "medical devices," "kerosene," and "agricultural chemicals," and maintaining the relevant licenses/permits and securing qualified personnel are prerequisites for continued operations. The status of licenses/permits and the availability of qualified personnel may affect store opening policy and business operations. In response, the company actively promotes the acquisition of qualifications by staff to minimize impact.

The occurrence of disasters such as wind, flood, or fire damage may affect business performance and financial condition. The company has fire insurance (excluding earthquake and certain other perils) on its stores, head office buildings, and merchandise. In addition, price increases driven by soaring resource prices, unstable overseas conditions, and yen depreciation may lead to sluggish corporate activity and consumption and worsening employment, potentially resulting in decreased sales. Certain risks such as earthquakes are excluded from insurance coverage, leaving residual financial exposure.

The home center business handles highly seasonal products such as heating and cooling equipment, beach goods, and festival-related items, and there is a risk that planned sales may not be achieved due to unfavorable weather such as a cool summer or warm winter. In addition to lost sales opportunities, inventory valuation losses arising from surplus stock may affect business performance and financial condition. The securities report does not describe any specific countermeasures.

The company retains customer information through the issuance of membership cards, point cards, and credit cards, as well as through prize contest entries, creating a risk of information leakage due to criminal activity or system failure. There is also a possibility of leakage from affiliated credit card companies and other partners, which could result in decreased sales and liability for damages due to loss of social trust. In response, the company has established "Personal Information Protection Regulations" and has put in place a strict management system.

The company operates 98 stores in the Chugoku region and 24 stores in the Kinki region, but continued store openings by drugstore chains, large-scale commercial facilities, and other home centers have led to overstore conditions in some areas. Intensifying competition from competitor store openings, even within the company's own dominant areas, may affect business performance. In response, the company is working to strengthen its assortment of "production materials" for farming and construction-related customers, and to enhance services such as customer service, custom orders, repairs, rentals, and technical support.

Under accounting standards for impairment of fixed assets, if it is determined that an impairment loss must be recognized for an asset or asset group, the carrying amount must be written down to the recoverable amount and recorded as an impairment loss. Since impairment assessments are conducted on an ongoing basis, if impairment arises due to deterioration in store profitability or other factors, it may have a material impact on business performance and financial condition. The securities report does not describe any specific preventive measures or countermeasures.