COX CO., LTD.

Sales of apparel and fashion goods are susceptible to trends in personal consumption driven by economic fluctuations, market competition with other companies, and changes in customer preferences. If merchandise procurement or product planning and development fail to align with demand trends, business performance may be adversely affected. The Group strives to avoid this risk by grasping demand trends and conducting appropriate product planning and procurement.

Many of the products handled are highly seasonal, and sales trends are affected by weather fluctuations such as intense heat, prolonged rain, and warm winters. In addition, if the shopping centers where stores are located or logistics functions suffer serious damage from large-scale natural disasters such as earthquakes, business activities may be significantly restricted, potentially affecting business performance. The Group has indicated a policy of striving to avoid the occurrence of such risks and to respond appropriately when they occur.

As of the end of the current fiscal year, 108 of the Group's total 175 stores are located within AEON Group shopping centers, and a substantial portion of sales depends on the customer-drawing power of the AEON Group. If the AEON Group's industry position or customer-drawing power fluctuates in the future due to industry restructuring or changes in the business environment, the Group's business performance may also be affected accordingly. Diversifying store openings outside the Group remains a challenge.

When opening new stores, the Group examines trade areas, competitive conditions, sales forecasts, and other factors, and opens stores at properties expected to be profitable; however, the number of properties meeting the store opening criteria may differ from initial plans. In addition, if actual sales or customer-drawing power at a given location falls below projections, or if changes in customer-drawing power occur due to new store openings by competing shopping centers, the performance of the relevant store may be adversely affected.

The Group leases all of its stores from developers, and in addition to providing guarantee deposits and security deposits at the time of opening stores, it also temporarily entrusts sales proceeds to developers. If a developer becomes insolvent or its creditworthiness deteriorates, there is a risk that all or part of the guarantee deposits, security deposits, and entrusted sales proceeds may become unrecoverable. Although the Group assesses the creditworthiness of business partners at the time of making store-opening decisions, it may be difficult to respond to subsequent changes in circumstances.

As the Group pursues its strategy of expanding EC sales, if a serious failure occurs due to information system malfunctions or cyberattacks, normal use of the system may become impossible, resulting in lost sales. Confidential data such as product planning information and financial information is also stored in electronic form, and a system outage could also damage the Group's brand image. The Group has indicated a policy of striving to avoid such occurrences and to respond appropriately when they occur.

The Group holds personal information necessary for business operations, such as information obtained through the issuance of membership cards (point cards). If personal information is leaked externally due to unauthorized access or other causes, it could damage the Group's brand image and give rise to legal liability. As the EC business expands, the volume and importance of personal information held by the Group are increasing, requiring continuous strengthening of information management systems.

A certain proportion of products sold domestically are procured from China and ASEAN countries. If a slowdown in economic growth, instability in the political and economic situation, changes in laws or policies, terrorism, or the outbreak of infectious diseases occurs in these regions, the Group's business and performance may be adversely affected. Similar risks also exist if problems arise in logistics, quality control, or taxation. Responding to geopolitical risks and infectious disease risks remains an ongoing challenge.