Impact of COVID-19 on Store Visits, Consumption and Product Procurement

「Economic activity has moved toward normalization following the reclassification of COVID-19 as a Class 5 infectious disease.」

「Although the Japanese economy was on a recovery trend from the impact of COVID-19 during the third quarter cumulative period, rising prices resulting from the international situation and other factors were suppressing consumers' willingness to spend, and the risk of putting downward pressure on the economy persisted.」

「During the cumulative second quarter period from 1 April 2023 to 30 September 2023, Japan's economy was gradually returning to normal in terms of social and economic activity as restrictions on behavior were lifted following the reclassification of COVID-19 as a Class 5 infectious disease. A recovery in consumption was observed in some areas, including food service and tourism.」

「Based on various sources of information, including government announcements and related news reports, and on the assumption that economic activity will normalize over a certain period through the fiscal year ending March 2024, the company is making accounting estimates for inventory valuation, the recoverability of deferred tax assets, impairment of fixed assets and other matters. The company also considers the impact of the spread of COVID-19 on its results to be minor and expects any future impact to be limited.」

「Regarding the impact of COVID-19 on the company's results, the spread of infections is continuing at present, and the timing of containment cannot be forecast with certainty. However, the company states that the impact on the current fiscal year is minor because thorough infection-prevention measures are being implemented at each store. If the future spread of infections forces temporary store closures, reduced operating hours or similar measures, sales could decline and materially affect results. In addition, if the supply chain is affected, sales could decline if the company is unable to procure products as expected.」

「Based on the assumption that economic activity will normalize over a certain period through the fiscal year ending March 2023, the company is making accounting estimates for inventory valuation, the recoverability of deferred tax assets, impairment of fixed assets and other matters. The company also considers the impact of the spread of COVID-19 on its results to be minor and expects any future impact to be limited.」

「During the third quarter cumulative period, there were no material changes to the assumptions described in the securities report for the previous fiscal year, including assumptions regarding when the COVID-19 pandemic would end.」

「During the second quarter cumulative period, there were no material changes to the assumptions described in the securities report for the previous fiscal year, including assumptions regarding when the COVID-19 pandemic would end.」

「Although the timing of the end of the COVID-19 pandemic cannot currently be predicted with certainty, the impact on performance during the fiscal year has so far been minor due to thorough infection-control measures at each store. If the spread of infections forces temporary store closures or shortened operating hours, sales could decline and materially affect performance. In addition, if the supply chain is affected, sales could decline if the company is unable to procure products as anticipated.」

「The company stated that the impact of the spread of COVID-19 on its business performance was minor and expected to remain limited.」

「However, based on the subsequent status of COVID-19 infections, the company changed its assumption to one in which economic activity would normalize over a certain period during the fiscal year ending March 2022 and made accounting estimates, including the recoverability of deferred tax assets and impairment of fixed assets. The company stated that the impact of the spread of COVID-19 on its business performance was minor and expected to remain limited.」

「However, after reviewing the future impact of the infection based on currently available information and other factors as of the end of the second quarter accounting period, the company changed its assumption from the impact lasting for approximately six months after the fiscal year-end to the impact continuing until around the end of the fiscal year, although the impact would gradually improve. The company noted that this change would have no material impact on the quarterly financial statements.」

「However, the global spread of COVID-19 led to production stoppages and transportation restrictions in some areas, making it difficult to secure and procure inventory.」

「During the fiscal year, the retail business was affected by a decline in store visits and lower consumer willingness to spend due to people refraining from going out and shortened operating hours following the outbreak of COVID-19. The impact of COVID-19 was expected to continue for an extended period, raising concerns over sluggish personal consumption resulting from deterioration in economic and employment conditions.」