Impact of COVID-19 on Business and the Supply Chain

「If a new infectious disease or other such disease emerges and spreads, it could affect the Group's supply chain through procurement from suppliers and the suspension of operations at production and logistics sites, potentially causing business activities to stagnate.」

「Japan's economy showed signs of recovery in personal consumption and inbound demand as the impact of COVID-19 eased, but」

「Japan's economy showed signs of recovery as the impact of COVID-19 eased, but」

「Although the Japanese economy showed signs of recovery as COVID-19 was reclassified to Category 5 and economic and social activity returned to normal, uncertainty continued due to rising raw material prices and energy costs and significant fluctuations in foreign exchange rates.」

「As COVID-19 was reclassified as a Category 5 disease, socioeconomic activity moved further toward normalization, and the impact of infectious diseases is expected to subside.」

「During the first 3 quarters of the current fiscal year, the global economy moved toward normalization as countries adopted living-with-COVID policies, but」

「As market conditions recovered with the decline in COVID-19 cases, sales of the core comfort shoe Achilles Sorbo, featuring the shock-absorbing material Sorbocein, the junior sports shoe Syunsoku, and the world-leading running shoe brand BROOKS performed well and exceeded the previous year’s level.」

「If the impact of COVID-19 is prolonged, the Group's supply chain could be affected by difficulties in procuring supplies from suppliers and the suspension of operations at production and logistics sites. This could cause the Group's business activities to stagnate and affect its operating results and financial position.」

「Although the global economy continued to be affected by the spread of COVID-19, restrictions on activity were eased, particularly in Europe and the United States, as vaccination programs progressed, and the economy began to recover. Japan's economy also showed signs of recovery as economic activity resumed, but recovery remained gradual owing to restrictions on activity associated with the spread of COVID-19 variants and the reissuance of a state of emergency, as well as the impact of the semiconductor shortage and other factors.」

「The Japanese economy also showed signs of a recovery following the resumption of economic activity, but the spread of COVID-19 variants and the reissuance of states of emergency left the outlook uncertain.」

「Based on strong relationships of trust with suppliers, the company is working to secure supplies and consider alternatives for materials that cannot be supplied. It has also held briefings on its basic procurement policy and requested each supplier's understanding of and cooperation with BCP (business continuity plan) measures.」

「During the third quarter of the current consolidated fiscal year, some regions recovered, but overall conditions remained difficult as improvements in corporate performance and employment and income conditions stagnated, partly because COVID-19 infections were spreading again in Europe and the US.」

「Although gross profit increased overseas owing to expanded sales of films and other products, and gross profit improved in Japan owing to lower raw material prices, while selling, general and administrative expenses decreased owing mainly to lower distribution costs, operating income declined by ¥319 million from the same quarter of the previous year to ¥357 million, down 47.2% year on year, owing to the decrease in gross profit resulting from lower sales caused by the spread of COVID-19.」

「Although selling, general and administrative expenses decreased owing to lower distribution costs associated with declining sales and controls on advertising expenses, travel and transportation expenses and other costs, the decline in gross profit resulting from lower sales caused by the spread of COVID-19 resulted in an operating loss of ¥92 million, compared with operating income of ¥236 million in the same quarter of the previous year.」

「If the social disruption caused by the spread of COVID-19 expands and becomes prolonged, the Group's supply chain could be affected by difficulties in procuring supplies from suppliers and the suspension of operations at production and logistics sites, potentially affecting the Group's operating results and financial position.」