Accounting Estimates Based on Assumptions Regarding the Impact of COVID-19

「These estimates were made based on factors considered reasonable in light of past results and the circumstances at the time.」

「The impact of COVID-19 on our performance remained evident during the current quarterly accounting period. On the other hand, as restrictions on the entry of foreign nationals have been eased and the government has launched travel support programs, among other developments, and it is difficult to expect economic activity to stagnate significantly due to COVID-19 as it has in the past, we have assumed that the impact on our performance will largely subside by the end of the current fiscal year. For subsequent periods, as we operate stores in various formats, we prepare sales forecasts that take into account the future prospects of each store and estimate future cash flows while also factoring in progress in cost control and other measures.」

「Although reduced operating hours under the priority preventive measures ended in March 2022, the number of cases increased sharply in July due to a variant, and the impact of COVID-19 on our performance remained evident during the current quarterly accounting period. On the other hand, given that the number of cases is trending downward and that it is difficult to expect economic activity to stagnate significantly due to COVID-19 as it has in the past, we have assumed that the impact on our performance will largely subside by the end of the current fiscal year.」

「In light of these circumstances, we have maintained the assumption that same-store sales will recover to approximately 80% of the level before the spread of the infection by around the middle of the current fiscal year, and have made accounting estimates, including impairment losses on fixed assets.」

「Based on the information currently available, we have made the above accounting estimate for impairment losses on fixed assets based on the assumption that same-store sales affected by the infection will recover to approximately 80% of the level before the spread of the infection by around the middle of the following fiscal year.」

「Based on the information currently available, we have assumed that same-store sales will recover to approximately 80% of the level before the spread of the infection by around the middle of the following fiscal year, and have made accounting estimates, including impairment losses on fixed assets.」

「However, during the second quarter accounting period, despite the accelerating rollout of the above vaccinations, the number of new cases of the infection rose sharply, particularly in the Tokyo metropolitan area, resulting in the reissuance and extension of the state of emergency. Accordingly, the recovery of same-store sales is expected to take longer than previously assumed. In light of these circumstances, we have revised our assumption so that same-store sales will recover to approximately 80% of the level before the spread of the infection by around the middle of the following fiscal year, and have made accounting estimates, including impairment losses on fixed assets, based on this assumption.」

「In light of these circumstances, we changed the assumption that same-store sales would recover to approximately 80% of pre-pandemic levels by the end of the fiscal year and made accounting estimates, including impairment of fixed assets, based on the revised assumption.」

「However, since late November 2020, Japan has continued to face an uncertain outlook, including a third wave of the disease and the issuance of a declaration of a state of emergency in January 2021. At the same time, preparations for establishing systems for vaccine administration and distribution have been accelerated. Based on this available information, we changed the assumption underlying our accounting estimates, including impairment of fixed assets, so that same-store sales affected by the disease would recover to approximately 80% of pre-pandemic levels by the middle of the following fiscal year.」

「As the results for the current second quarterly accounting period have been finalized and we determined that the environment allowed us to forecast the short-term impact of the disease to some extent, we made accounting estimates, including impairment of fixed assets, based on the assumption that same-store sales would recover to approximately 80% of pre-pandemic levels by the end of the fiscal year, together with further company-wide cost reductions.」

「Although there is no unified view regarding how the disease will spread or when it will subside, we have made accounting estimates, including impairment of fixed assets, based on the assumption that the impact of the spread of the disease will continue for a certain period during the fiscal year ending February 2021. If the status of the spread or its impact on the economic environment deviates from this assumption, our financial position, operating results and cash flows may be affected.」