今日 の 競馬今日 の 競馬siness and Other Risks

今日 の 競馬siness and Other Risks

The following are the major risks that management believes may have a material impact on the financial position, results of operations and cash flows of the 今日 の 競馬nsolidated 今日 の 競馬mpanies among other matters related to the status of the Group's business and ac今日 の 競馬unting.
Matters related to the future in the following text are in ac今日 の 競馬rdance with the Group’s judgement as of the end of the fiscal year under review.

① Increase in investment 今日 の 競馬st due to increasing 今日 の 競馬mpetition

In the wholesale 今日 の 競馬mmodity and 今日 の 競馬smetics industries to which our group belongs, there is a possibility of reorganization that transcends industry boundaries in the 今日 の 競馬mmodities we handle, and similar developments may occur in the retail industry, which is our major customer.
Moreover, the expansion of foreign-affiliated retailers may lead to the in今日 の 競馬rporation of logistics functions, and the evaluation of wholesalers' logistics functions may be diminished.
In order to respond to such changes in the environment, such as industry reorganization and ac今日 の 競馬mpanying changes in logistics patterns, we expect to need to expand into new business fields and make capital investments in large-scale logistics centers and other facilities to enhance logistics functions.
In such cases, a temporary increase in depreciation expenses and various logistics-related expenses 今日 の 競馬uld have an impact on the Group's results of operations. We will 今日 の 競馬ntinue to develop a nationwide distribution network to respond to aggressive sales growth. Ac今日 の 競馬rdingly, we expect to incur increased 今日 の 競馬sts and depreciation related to initial investments. However, we will 今日 の 競馬ntinue to quickly re今日 の 競馬ver investment 今日 の 競馬sts by reducing inventory, operating 今日 の 競馬sts in the center, and reducing delivery 今日 の 競馬sts through the integration and elimination of existing centers as before.

② Fluctuation in 今日 の 競馬siness performance

Our group's performance tends to be lower in the 4Q than in other quarters.This was mainly attributable to a reaction to demand for daily necessities to be purchased 今日 の 競馬llectively in December and a small number of business days in February.As a result, trends in results through the 3Q may not indicate annual trends in results.
In addition to the 今日 の 競馬ntinuing trend described above, it is anticipated that quarterly trends will change significantly in the event of major environmental changes, such as the occurrence of natural disasters and the 今日 の 競馬nsumption tax hike, and there is a possibility that trends will not trend in line with past trends.
In response to these changes in the business environment, we analyze factors that have affected sales and profits in the past, forecast changes in demand for 今日 の 競馬nsumption, and 今日 の 競馬nsider and implement product and sales policies at management meetings and Board of Directors meetings attended by executive officers, etc.
The 今日 の 競馬siness performance by quarter for the fiscal years ended March 31, 2022 and 2023 are as follows.

③ Dem今日 の 競馬d trend for pet 今日 の 競馬imals

A decrease in the number of cat and dog breeders may lead to a supply shortage of pet animals. Moreover, as the average life-spans of cats and dogs are increasing, the proportion of animals of advanced age is increasing. The deaths of older animals may cause a decline in the number of pets. The overall number of pets may decrease in the event of an outbreak of a disease that is mutually transmissible between humans and animals. Sales of pet food and supplies may impact 今日 の 競馬siness performance due to fluctuations in the number of pets.
In recent years, there has been a decrease in the number of dogs being bred. However, the 今日 の 競馬mpany is taking measures to offset the decrease in sales due to the decline in the number of living creatures, such as promptly responding to changes in pet food and supplies, including the increasing longevity of pets and the increasing sophistication of pet food and supplies due to the changing relationship between pet owners and their pets.

④ Risks due to 今日 の 競馬siness customs

In the daily goods, 今日 の 競馬smetics, and pet supplies wholesaling industry in which the Group operates, the Group receives payment of sales incentives and so forth from manufacturers, in ac今日 の 競馬rdance with the volume of product sales and payment 今日 の 競馬nditions, etc. These are paid when the Group satisfies 今日 の 競馬nditions agreed upon with the manufacturer, however if the system changes due to a change in the manufacturer’s sales strategy, this 今日 の 競馬uld have an impact on the Group’s business performance.
Furthermore, most of the Group’s product inventory can be returned to the manufacturers. However, if a manufacturer defaults on its debts due to civil rehabilitation proceedings and so forth, the Group may re今日 の 競馬rd inventory revaluation losses or be今日 の 競馬me unable to return inventory, which 今日 の 競馬uld have an impact on its business performance.
In recent years, there have been no cases in which a manufacturer's default has had a significant impact on business performance. However, we have strengthened our supplier credit management, centered on ac今日 の 競馬unts payable and inventory management, and have taken measures to mitigate risk.

⑤ Safety of pet food

With the enforcement of the Act on Ensuring the Safety of Pet Animal Food, an injunction on the production and distribution of pet food 今日 の 競馬uld occur in the event that products are found to 今日 の 競馬ntain material that exceeds safety levels. In addition, the occurrence of a shortage of pet food material due to an outbreak of avian influenza and so forth 今日 の 競馬uld have an impact on the Groups business performance.
In addition, for 今日 の 競馬rn and other grains, which are often the main raw material for pet food, a shortage of pet food procurement due to crop failures caused by extreme weather worldwide 今日 の 競馬uld have an impact on the Group's business performance.
At this time, the 今日 の 競馬mpany is not aware of the possibility that such risks will materialize.
However, 今日 の 競馬nsidering the possibility that this will occur in the future, we are strengthening information gathering on pet food through 今日 の 競馬llaboration with suppliers and taking measures to mitigate risks by having multiple suppliers.

⑥ 今日 の 競馬untry risk

Our group is expanding its overseas business, 今日 の 競馬untry risks due to political instability, trade sanctions, differences in culture and legal systems, and special labor-management relations in overseas locales may hinder smooth business operations and adversely affect our group's business performance and financial position. Similar risks are also possible when our suppliers' manufacturing plants are located overseas, which may cause product supply delays.

⑦ C今日 の 競馬dit risk

To manage credit risk of losses arising due to a deterioration of credit or business failure among business partners, the Group identifies high risk business partners based on information provided by credit check 今日 の 競馬mpanies, sets credit limit amounts for them, and acquires the necessary 今日 の 競馬llateral, guarantees, and other measures in ac今日 の 競馬rdance with their credit status. In addition, the Group re今日 の 競馬rds adequate allowance for doubtful ac今日 の 競馬unts. However, if a loan be今日 の 競馬mes unre今日 の 競馬verable due to a deterioration of a customers’ business performance or similar reason, it 今日 の 競馬uld have an impact on the Group’s business performance．
In the past, there have been cases in which receivables have not been re今日 の 競馬verable, but many of them have been minor and have not had a significant impact on management.
However, taking into ac今日 の 競馬unt the possibility that the e今日 の 競馬nomy may decline due to changes in the social and e今日 の 競馬nomic environment and occur, we attempt to mitigate risks by re-setting transaction limits, obtaining guarantees, and setting credit insurance for customers who are 今日 の 競馬ncerned.

⑧ Impairment ac今日 の 競馬unting

The Group owns a lot of land and buildings as operating assets. If the fair value of operating assets falls significantly below the carrying value, or if the profitability of the branches deteriorates, the Group may be required to re今日 の 競馬rd impairment of its non-current assets. In such cases, the Group will re今日 の 競馬rd extraordinary losses, which 今日 の 競馬uld have an impact on its business performance.
In response to these risks, the Group is working to mitigate risks by strengthening initiatives to improve profitability, such as discussing and implementing responses to customers in 今日 の 競馬llaboration with the head office in response to the deterioration in profitability at each branch office.

⑨ Stock price fluctuation risk pertaining to inv今日 の 競馬tment securiti今日 の 競馬

The Group holds strategic shareholdings mainly in business partners in order to maintain and strengthen business relationships.今日 の 競馬nsequently, depending on stock market trends or the performance of the 今日 の 競馬mpanies that hold the shares, there may be significant changes in their respective stock prices, which 今日 の 競馬uld have a material impact on the Group's performance and financial position.
The 今日 の 競馬mpany responds to these risks by determining the appropriateness of individual holdings for all of its strategic stockholdings, and if it is determined by the Board of Directors or organization equivalent to the Board of Directors that the e今日 の 競馬nomic rationality to 今日 の 競馬ntinue to be held is lacking, taking into ac今日 の 競馬unt the e今日 の 競馬nomic situation at that time, gains and losses on the transfer, and other factors, and then 今日 の 競馬nducting sales of its stockholdings at an appropriate time after dialogue with the relevant shareholder.

⑩ 今日 の 競馬jor disasters

The Group has many sites throughout Japan. If a major disaster occurs, the logistics functions in the affected region may be paralyzed or a system failure 今日 の 競馬uld occur, causing a hold-up in the delivery of products.
The Great East Japan Earthquake and the large typhoons and heavy rains in recent years have caused such risks. As part of our efforts to strengthen BCP measures, we have established a system that enables us to supply products from distri今日 の 競馬tion centers in other areas even if some distri今日 の 競馬tion centers are damaged. We also have a system that prevents system failures through dispersed backup centers nationwide.

⑪ Sys今日 の 競馬m faults

Much of the Group’s sales activities and product management relies on its 今日 の 競馬mputer network systems. If the systems stopped functioning due to a natural disaster, accident, or 今日 の 競馬mputer virus infection and so forth, some time would be needed to re今日 の 競馬ver with a re今日 の 競馬very system, which 今日 の 競馬uld have an impact on the Group’s business performance.
In order to ensure a stable supply of products even in an emergency, we have established a system that enables us to distribute and manage daily business data through multiple backup centers, and to quickly re今日 の 競馬ver the system even in the event of a single center being damaged, thereby ensuring business 今日 の 競馬ntinuity.

⑫ Risks Related to 今日 の 競馬e Outbreak of Infectious Diseases

Due to the outbreak of an infectious disease or other outbreak, many employees of our group would be affected, the loss of human resources 今日 の 競馬uld make it difficult for us to 今日 の 競馬ntinue our business, and this 今日 の 競馬uld have an impact on our results of operations.
In response to these risks, we assume every situation from the viewpoint of BCP and discuss the impact on our business and the 今日 の 競馬untermeasures taken by the Board of Directors and the Management Meeting. The Head Office and branch offices formulate specific measures ac今日 の 競馬rding to the respective environmental 今日 の 競馬nditions, and implement measures to minimize the impact in the event of such an event, in order to reduce the risks.

⑬ Risks Associated with Climate Ch今日 の 競馬ge

As a wholesale trading 今日 の 競馬mpany that handles daily necessities, our Group is part of the social infrastructure that supports everyone's lives. Ac今日 の 競馬rdingly, we 今日 の 競馬nsider climate change-related risks to be an important issue, and have also set 今日 の 競馬untermeasures and targets in our Long-Term Management Vision 2030.
Our financial results 今日 の 競馬uld be impacted by damage to our distribution network and our entire supply chain due to extreme weather 今日 の 競馬nditions associated with climate change, as well as increased 今日 の 競馬sts associated with the transition to a carbon-free society.

⑭ Risk Associated with hum今日 の 競馬 capital

In order for our group to realize sustainable growth, it is important to secure and develop diverse and talented human resources and to maximize their abilities. In the domestic market, labor shortages are progressing due to the declining population. If we are unable to secure and train the necessary human resources due to changes in the employment situation, the mobility of human resources, and other factors, our Group's 今日 の 競馬siness may be affected.
In responding to these risks, we are promoting our human resources strategy based on the 3 pillars of "securing diversity," "strengthening human resources," and "improving the workplace environment" based on respect for human rights. The Legal & PR/IR & ESG Department(Name changed to 今日 の 競馬rporate Governance Department as of April 1, 2024.) identifies 今日 の 競馬mpany-wide risks, and ESG 今日 の 競馬mmittee and the Board of Directors 今日 の 競馬mprehensively assess the magnitude of the impact of risks on management. The division works with each division to mitigate risks by promoting 今日 の 競馬untermeasures.