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Business and Other Risks

  • Last Update:2017/04/07
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The following risks are likely to affect the sales performance, stock value, financial situation, etc. of the Senshukai Group.
Note that matters in the text related to the future are those that have been decided as of March,31, 2017.

1. Risks related to changes such as the political or economic situation in producing countries
Most of the products our Group sells are imported from Asian countries such as China. This means that there is the chance of political and economic situations, or natural disasters, in China and other Asian nations affecting our Group’s performance and financial situation.
2. Risks related to currency fluctuations
The main business of our Group is catalogue sales, and some of the items we handle are imported from overseas denominated in foreign currencies. This means that major changes in the exchange rate could affect our Group’s performance and financial situation.
3. Risks related to the leakage of personal information
Along with some of our subsidiaries, we fall under a personal information-handling business as stipulated in the Personal Information Protection Law. Along with complying with the law, our Group is boosting its internal management system, installing a person in charge of managing customer information to prevent leaks. We have also obtained Privacy Mark certification.
However, should there be a leak of personal information held by our Group, it has the risk of leading to a loss of confidence in our Group, and this worsened corporate image affecting our performance and financial situation.
4. Risks related to natural disasters, etc.
In our Group’s main business of catalogue sales, any natural disasters will have a major effect on tasks such as order processing and product shipment. To minimize these effects, we use redundant systems and earthquake-resistant measures, as well as using distributed shipping centers. In addition, we have also established a Risk Management Committee and set response rules for when a disaster strikes.
However, should a major disaster cause damage to our facilities, it will affect our order processing and product shipment work, and has the risk of affecting our Group’s performance and financial situation.
5. Risks related to systems
There is the risk of damage to our Group’s computer systems through a range of causes that include earthquakes, typhoons, floods, hardware or software failure, terrorism, and cyberterrorism. As almost all our work is done on computers, taking some time to recover from computer problems has the risk of affecting our performance and financial situation.
6. Risks related to legal regulations, etc.
In our Group’s major business, catalogue sales, we are subject to a number of legal regulations, including the Act against Unjustifiable Premiums and Misleading Representations (Premiums and Representations Act), the Act on Specified Commercial Transactions, the Pharmaceutical Affairs Act, and the Product Liability Law. Therefore we are developing a system to enforce compliance with these laws through the creation of management systems that include developing a compliance system and thorough staff education.
However, if there are revisions to the regulations in the related laws or new regulations are created, or these regulations can no longer be complied with, there is the risk of damage to our Group’s business and performance, such as a worsened corporate image.
7. Risks related to unseasonable weather
In our Group’s major business, catalogue sales, unseasonable or inclement weather such as cold summers, warm winters, or extended periods of rain can affect sales, so there is the risk of effects on our Group’s performance.
8. Risks related to corporate acquisitions and strategic tie-ups
Our Group may perform corporate acquisitions and enter into capital and other strategic tie-ups as an ongoing part of our business strategy to expand existing business bases or advance into new businesses. Ample surveys, analyses, and investigations will be conducted when reaching decisions on such moves. However, contingent liabilities may develop and unrecognized liabilities may surface after the acquisition or alliance. In the event business plans do not progress as initially intended, there is the risk of serious effects on our Group’s performance.
9. Risks related to inventory
Our Group offers private brands (PB) that precisely target the requirements of specific customer segments and, to reinforce our earning capacity, engages in product development as a specialty store retailer of private label apparel (SPA), encompassing steps from planning to manufacturing to sales. Efforts are made to refine procurement, sales, and inventory plans, to reinforce inventory control, and to improve the turnover rate of merchandise. However, unexpected fluctuations in sales volumes may cause overstock. In the event the overstock does not decrease, requiring disposal or leading to appraisal loss, there is the risk of serious effects on our Group’s performance.
10. Risks related to product safety
We are carrying out initiatives Group-wide to improve the quality of the products our Group provides, ensuring not only that they in compliance with related laws, but also through establishing our own in-house standards and regulations. However, there is the risk that in the future, problems could arise regarding safety or display in products for sale or advertisement representations. If this sort of issue arises, it is expected to cause declines in sales through a decline in the image of our Group as well as considerable costs, and has the risk of affecting our Group’s performance and financial situation.
11. Risks related to harmful rumors spread by the internet, etc.
Our Group is working to maintain and improve trust through press releases, the timely disclosure of information, and so on, trying to prevent risks from manifesting themselves. However, postings to internet bulletin boards or the spread of rumors or theories by the mass media, etc. based on these postings have the risk of affecting our Group’s business, performance, and financial situation, as well as our company’s stock price.