The Isetan Mitsukoshi Group is aware of the following risks in relation to business, etc. that may have a major impact on the decisions of investors.
Demand in the department store business and retail specialty store business, which are our main businesses, can negatively impact the Groups results and financial status due to being greatly impacted by climatic conditions, economic circumstances such as economic fluctuations and consumer trends, and competition with other companies, etc. both domestically and in other countries in which we operate.
With regard to international expansion, we operate department stores in Southeast Asia, China, Taiwan, the USA, and Europe. Items in local currencies including the net sales, expenses, and assets of these stores have been converted to yen in order to create consolidated financial statements, so their value after conversion may be affected by the exchange rate at the time of conversion.
Furthermore, international business expansion carries risks such as the following:
In countries in which we operate, a range of government regulations apply, such as permission to conduct business or invest, and the Group is subject to laws relating to fair trading, consumers, tax, foreign exchange control, the environment, and recycling.
If we are unable to comply with these regulations, it may lead to our activities being curtailed and an increase in costs.
Department store business and retail specialty store business rely on physical stores for international expansion, and natural disasters and accidents, etc. can have a negative impact on the continued operation of stores.
We have created the Basic Plan on Earthquake Response and a business continuity plan as measures to respond to disasters and accidents, and we are enhancing our capacity to respond in the event of a major earthquake, including initial response and subsequent business continuity.
However, a large earthquake occurring in Tokyo may negatively affect the Groups results and financial status as there is a risk of immense damage to employees and buildings, etc. due to our main stores being concentrated in the Tokyo Metropolitan Area.
Retail specialty store business conducts transactions aimed at customers (consumers), so if products with defects, such as faulty products and products that cause food poisoning, are sold, we may be subject to public regulation, and we may incur costs from paying damages for product liability or default on obligation, etc.
Furthermore, such an event may negatively affect the Groups financial status, such as by reducing sales due to the loss of trust of consumers.
Also, we conduct transactions with companies, focusing on the out-of-store sales department and other business wholesaling, and if costs arise, such as having to pay damages for product liability or default on obligation, etc., or it becoming impossible to recover accounts receivable due to the insolvency of the other party, and it may negatively affect the Groups results or financial status as the price per sales contract to corporate customers is high.
The Isetan Mitsukoshi Groups systems are mainly controlled by data center computers, and we have taken steps such as installing dual power lines and telecommunications lines, undertaking earthquake-proofing work, and controlling intruders. However, serious damage to facilities due to natural disasters or accidents, etc., damage to telecommunication lines, impediment to power supply, or damage due to an intruder or the negligence of an employee, may negatively affect the Groups results or financial situation as it may impede the work of the Group.
The Group has located its systems at external facilities with highly safe data center specifications in order to mitigate these operational risks.
The Isetan Mitsukoshi Group retains and processes the personal information of customers, mainly in the department store and retail specialty store business, the credit, finance, and customer organization management business, and the information services business. Management of personal information is conducted in strict adherence to the internal management system; however, if information is leaked externally due to criminal activity, etc. it is conceivable that we would incur costs due to damages payable to individual customers or reduced sales due to loss of public credibility, and this may negatively affect the Groups results or financial situation.