Sudden Political, Economic and Social Events in Overseas Sales Regions

「Going forward, the Company will shift from an Asia and ASEAN strategy centered on China and Taiwan to a global strategy, prompted by its entry into the U.S. market, and seek to expand its overseas business while assessing growth opportunities and country risks.」

「In overseas sales, despite activity restrictions caused by the novel coronavirus disease, the Company pursued initiatives in China aimed at a swift sales launch from the second quarter onward, including preparations to open a flagship store on the major cross-border e-commerce marketplace Tmall Global and preparations to launch social media marketing as part of its new strategy.」

「Overseas sales activities have been delayed, particularly because of the impact of lockdowns related to COVID-19 in China, our main overseas market.」

「During the cumulative second-quarter period, the Japanese economy experienced a global resurgence in infections due to the Omicron variant of the novel coronavirus disease.」

「The global spread of emerging infectious diseases, including novel influenza and the novel coronavirus disease, could disrupt the business activities of the Company's group. Specifically, if the supply chain, call centers, logistics centers, stores or imports and exports are affected, the stable procurement of products and materials and the receipt and delivery of customer orders could be disrupted.」

「For overseas sales, while conducting business activities after assessing the state of economic activity in each region, the company saw overseas sales increase, helped by strong sales at China's 618 e-commerce shopping event, one of the two largest shopping events alongside Double Eleven, which reached 1.8 times the previous year's level.」

「In overseas sales, the Company is working to expand sales while assessing the local impact of the novel coronavirus disease and the state of economic activity.」

「In light of these risks, as part of its business continuity measures, the Company has implemented necessary measures, including introducing work-from-home and staggered-working-hours systems and thoroughly managing workplace hygiene, to prevent employees from becoming infected and to prevent the spread of infection. The Company is also coordinating appropriately with external partner companies to maintain call-center operations and the supply chain.」

「Depending on the spread of the novel coronavirus disease, the Company's financial condition and operating results could be affected by reduced store hours, temporary store closures and a decline in customer visits caused by requests to refrain from going out. Delays in transactions with overseas companies and impacts on the supply chain could also affect the Company's performance, and the Company will continue to monitor developments closely.」

「Following the global spread of the novel coronavirus disease that emerged mainly in Wuhan, Hubei Province, the People's Republic of China, in December 2019, and its spread within Japan, changes in consumers' purchasing behavior and declining purchasing intent have been observed. Delays in transactions with Chinese companies and impacts on the supply chain could also affect the performance of the Company's group, and the Company will continue to monitor developments closely.」

「In its overseas business activities, unexpected economic, political or social contingencies, the outbreak of terrorism, war or civil unrest, social and economic disruption caused by epidemics, natural disasters, abnormal weather and unfavorable weather conditions could adversely affect the Company's financial condition and operating results.」