Impact of COVID-19 on Inbound Demand, Facility-Based Stores and Supply Functions

「During the cumulative second quarter of the fiscal year, normalization of economic activity progressed as COVID-19 was reclassified as a Class 5 disease and traffic recovered. However, the challenging environment continued amid soaring energy and raw-material prices, a serious labor shortage and the 2024 logistics problem.」

「During the first quarter of the current fiscal year, Japan's economy remained on a gradual recovery trend, with economic activity supported by increased foot traffic as the impact of COVID-19 subsided and growing inbound demand following the easing of entry restrictions for foreign visitors.」

「While economic activity is expected to recover as the legal classification of COVID-19 infection changes from Category 2 equivalent to Category 5,」

「The business operated in facilities under the Poplar and Seikatsu Saika brands saw recovery progress, with same-store sales for the first nine months of the current fiscal year reaching 104.9% of the prior-year period as foot traffic recovered following the easing of restrictions on activities. However, at stores within facilities that we have strategically expanded, sales at the end of the third quarter of the current fiscal year remained at 82.4% of pre-pandemic levels. In particular, sales at stores within hospitals, where we have opened many locations, remained at a challenging 79.5%, with no prospect of recovery.」

「Regarding sales, sales at stores within facilities that had been heavily affected by the COVID-19 pandemic began to recover, and the easing of restrictions on activities also contributed. Total operating revenues for the first six months of the current fiscal year were ¥6,903 million, up 3.4% year on year.」

「Regarding sales, sales at stores within facilities that had been heavily affected by the COVID-19 pandemic began to recover. In addition, the number of operating days had been restricted at many stores undergoing brand conversion renovations in the same period of the previous year, and the rebound from that factor contributed to total operating revenues of ¥3,454 million for the first quarter of the current fiscal year, up 17.9% year on year.」

「Within our group, repeated states of emergency and priority preventive measures to prevent the spread of disease caused continued sluggish sales at stores located within facilities, particularly in urban areas, because of temporary closures and fewer customer visits at universities, offices, hotels and hospitals, where our group has many stores.」

「Repeated states of emergency and priority preventive measures to prevent the spread of disease caused continued sluggish sales at stores located within facilities, particularly in urban areas, because of temporary closures and fewer customer visits at universities, offices, hotels and hospitals, where our group has many stores. However, since the lifting of the declaration at the end of September 2021, foot traffic has gradually recovered, and sales at these stores have also been recovering.」

「Within our group, repeated states of emergency and priority preventive measures to prevent the spread of disease have continued to cause temporary store closures and fewer customer visits, particularly in urban areas. This has been due to recommendations for remote work at universities and offices, where we have many stores, lower operating rates at hotels and entertainment facilities, and visiting restrictions and limits on outpatient services at hospitals, among other factors,」

「Within our group, the reissuance of states of emergency and the effects of priority preventive measures to prevent the spread of disease caused temporary closures and reduced hours to increase again, particularly at stores in urban areas and within facilities. Sales have continued to fall short of plan because of the decline in customer visits.」

「The declaration of a state of emergency accompanying the spread of COVID-19 and the shift by companies to remote work reduced customer visits as people refrained from going out and restrictions were placed on movement. They also led to the cancellation or postponement of store openings in limited trade areas, such as business establishments, resulting in lower sales. If these conditions persist, they may affect our operating performance and financial position.」

「In the convenience store industry, the expansion of working from home and requests to refrain from going out during the COVID-19 pandemic caused a decline in customer visits, particularly at stores in urban areas and within facilities. Although demand from people staying at home pushed up average spend per customer, sales fell substantially overall. Economic policies such as the government's Go To campaign and temporary stockpiling demand following tobacco price increases temporarily boosted sales, but the spread of infections during the second and third waves of COVID-19 gradually led people to refrain from going out again, and weak consumption has continued.」

「The impact was particularly significant at stores in limited trade areas, such as leisure facilities, hotels, schools and factories, where we have promoted store development in recent years. The suspension of operations, requests to refrain from going out, remote classes and telework forced many stores to close from March onward, and some still had no prospect of reopening, creating an extremely challenging operating environment.」

「However, the closure of leisure facilities and hotels, university closures, requests to refrain from going out, telework and other factors resulted in 89 stores being forced to close from March onward and 68 stores operating on reduced hours. In total, just over 30% of all stores were affected.」

「The COVID-19 pandemic has had a severe impact on the Japanese economy through measures including bans on entry by foreign nationals, requests to refrain from going out and the cancellation of events, while its end remains unforeseeable. We had focused on opening stores inside facilities such as hospitals, hotels, universities and offices. However, these stores have been particularly affected since February 2020 by declining consumption by visitors to Japan, facility closures and declining daytime populations in office buildings due to teleworking.」