Risk of economic and earnings impacts from COVID-19

「The pandemic and stagnation of economic activity」

「Declining sales of products related to COVID-19 as the pandemic subsided」

「Declining sales of products related to COVID-19 as the pandemic subsided」

「The operating environment surrounding the Group has become increasingly difficult due to declines in prescription prices caused by revisions to drug prices and certain dispensing fees, lower sales of COVID-related products as the pandemic subsided, and intensifying competition among companies from other industries and peers as the number of stores increased.」

「During the current consolidated fiscal year (1 March 2022 to 28 February 2023), Japan’s economy showed signs of recovery in socioeconomic activity despite the continued impact of COVID-19, due to the easing of restrictions on activities and border-control measures.」

「Although demand for some products increased due to the renewed spread of COVID-19 and record heat, the operating environment surrounding the industry has become increasingly difficult due to the substantial reductions in drug prices and certain dispensing fees implemented in April, sluggish growth in prescriptions filled as infections spread again, and further intensification of competition to open stores.」

「During the cumulative third quarter of the current consolidated fiscal year, Japan’s economy remained in a difficult situation due to the impact of COVID-19. However, the number of new cases declined substantially in Japan against the backdrop of a high vaccination rate, and moves toward normalising economic activity through the easing of restrictions began to emerge. Nevertheless, concerns over another resurgence of COVID-19 infections and rising costs, including raw material prices, have become apparent, and the outlook for the economy remains uncertain.」

「During the cumulative second quarter of the current consolidated fiscal year (1 March 2021 to 31 August 2021), Japan’s economy remained affected by sluggish personal consumption and continued restrictions on corporate activity amid the resurgence of COVID-19 infections.」

「Demand, particularly personal consumption, declined as the renewed spread of COVID-19 led to the application of priority preventive measures to the affected regions and the issuance of a third state of emergency.」

「Against the backdrop of the spread of COVID-19, demand increased for infection-prevention products such as masks and disinfectant alcohol, as well as stay-at-home products such as food and household goods. At the same time, demand for cosmetics weakened as lifestyles changed, including the promotion of telework; inbound demand disappeared due to entry restrictions; and the number of cold and influenza patients fell sharply as mask-wearing, handwashing, and disinfectant use became habitual.」

「The spread of COVID-19 led to declines in corporate earnings and personal consumption and deterioration in the employment environment, resulting in challenging conditions. The outlook also remains extremely uncertain, as the number of COVID-19 patients has again begun to trend upward.」

「A decline in the number of prescriptions dispensed due to reduced medical consultations against the backdrop of the spread of COVID-19, and a prolonged slump in inbound demand due to entry restrictions, among other factors」

「In the drugstore industry, demand increased for some products, such as masks, as well as for daily necessities and food, resulting in more store visits. However, the operating environment surrounding the Group remains precarious due to a sharp decline in inbound demand caused by restrictions on cross-border travel and a decline in the number of patients visiting stores for prescription dispensing as fewer people visited medical institutions.」

「In response to COVID-19, we established a task force and thoroughly implemented infection-control measures, including installing ethanol disinfectant, promoting ventilation, conducting regular cleaning and disinfection, taking employees’ temperatures before work, and installing splash-prevention panels at stores. To support the customers and patients of local communities, all employees are prioritizing the continuation of store operations. The impact on our group is limited at present, but if the situation becomes more serious or prolonged, it may affect our business performance.」