AIGAN CO.,LTD

If customers' purchasing intent declines due to stagnant real wages, decreased disposable income, or sustained long-term inflation, there is a risk that sales revenue could fluctuate significantly through decreases in unit sales volume or average customer spend. In addition, deteriorating manufacturing and shipping/transportation conditions at suppliers' overseas bases due to global circumstances, along with rising procurement costs, could lead to higher selling prices, potentially further worsening consumer sentiment. If the business plan does not progress as planned, there is a possibility of additional impairment losses on fixed assets or a slowdown in the pace of new store openings.

In the eyewear industry, unit price declines driven by low-price competition and market shrinkage have continued, resulting in a severe competitive environment. If the spread of disposable contact lenses expands further, or if surgical treatments for myopia, astigmatism, and hyperopia such as PRK become widely accepted as a safe method, demand for eyeglasses could shrink further, potentially affecting business results. While each company is working to create new demand through low-price appeals and the development of value-added products, responding to the structural trend of market contraction remains a challenge.

In addition to competition with other companies in the same industry in terms of product lineup, quality, price, and service, the Group also competes with fashion accessory stores handling sunglasses and contact lens retailers, resulting in a multifaceted competitive environment. The Group strives to secure competitiveness through thorough cost reduction and strengthening of technical and counseling capabilities, but if competition intensifies and relative competitiveness declines, business results could be affected. In particular, as competition in the low-price segment continues, maintaining a differentiation strategy remains an ongoing challenge.

The Group's policy is to expand store openings in regional core cities, centered on the Kansai, Kanto, and Tokai regions, but there is a risk that store openings may not proceed as planned if properties meeting the required conditions (trade area population, competitive situation, rent, etc.) cannot be secured. There is also a risk of adverse impact on business results if the location environment changes after a store has opened. Since location conditions are a major factor determining individual store sales, the ability to secure suitable properties is directly linked to the feasibility of the growth strategy.

Differentiation as a specialty eyewear retailer requires personnel with technical skills in vision measurement, processing, and adjustment, as well as sales knowledge in optics and ophthalmology, and as equipment standardization progresses, the quality of personnel has become the foundation of competitiveness. If the Group is unable to secure and develop sufficient personnel to support new store openings, it may be forced to revise its store opening plans, which could affect business results. The Group has introduced a goal management system, a grade-based responsibility system, training programs, and a specialist system to maintain motivation and strengthen talent development, but there remains a risk that recruitment difficulties will continue due to intensifying competition in the labor market.

The Group handles a wide range of customer personal information and continuously implements centralized management of customer data at its head office, advanced system security measures, and employee training and internal audits based on various management regulations. However, if information leakage occurs due to unavoidable system trouble caused by external factors or human error, it could affect business results through a decline in social reputation. Compliance with the Personal Information Protection Act also entails ongoing costs and management burden as a risk.

It is explicitly noted that if the business plan does not progress as planned, additional impairment losses may become necessary for fixed assets such as stores. The eyewear retail business is a business model involving capital investment in stores, and if sales stagnation continues, the impairment of asset value will directly affect financial figures. In an environment of continued market contraction and intensifying competition, there is an inherent structural increase in impairment risk due to declining profitability of existing stores.

If manufacturing and shipping/transportation conditions at suppliers' overseas bases deteriorate due to global circumstances, there is a risk that products cannot be delivered to the market in a timely manner. In addition, rising procurement costs could lead to higher selling prices, which could reduce sales volume through a worsening of consumer sentiment. Since the eyewear wholesale business also involves business partners with similar sales formats, it may be similarly affected.

Since business partners in the eyewear wholesale business have sales formats similar to those of the Group, deteriorating consumption trends and intensifying competition in the retail market could similarly spill over to affect the wholesale business. Both the retail and wholesale businesses are structurally exposed to the same market environment risks simultaneously, limiting the effect of risk diversification. If the overall market enters a contraction phase, the impact on the Group's overall business results could be amplified.

If the population of contact lens wearers increases, particularly among people in their twenties, due to the growing convenience and spread of disposable contact lenses, substitution away from eyeglass demand may progress. Furthermore, if refractive correction surgeries such as PRK become widely accepted as a safe method due to reduced risk of complications, demand for eyeglasses could shrink structurally, potentially having a significant impact on the Group's business results. The spread of these technological substitutes is a risk that requires ongoing monitoring as a factor in medium- to long-term demand decline.