Climate Change Data

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Established employee well-being initiatives (implied by discussion of employee turnover and efforts to improve working conditions)
• Introduced performance-based stock compensation for executives (indicating alignment of executive compensation with company performance)

Governance Achievements

• Transitioned to an audit and supervisory board system in 2016
• Established a Nomination and Compensation Committee in 2019
• Abolished retirement allowance system for executives and introduced performance-linked stock compensation in 2016

Climate Goals & Targets

Environmental Challenges

• Competition from larger 100-yen shop chains
• Decreased profitability in overseas uniform businesses and domestic fashion accessories due to the COVID-19 pandemic
• Rising labor costs and difficulty in securing part-time employees
• Increased rent costs
• Supply chain disruptions (implied by discussion of sourcing strategies)
• Economic downturn in Peru affecting overseas business

Mitigation Strategies

• Strengthening consignment sales
• Reviewing fashion accessories business
• Focusing on wholesale in overseas markets
• Implementing cost reduction measures (e.g., reducing operating costs, optimizing store formats, utilizing consignment sales)
• Improving store efficiency through automation and POS systems
• Developing alternative sourcing strategies (implied by discussion of Real's acquisition)
• Careful selection of new store locations
• Strategic store closures of underperforming locations

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Watts Seibu Honkawago Pepe store won the Fantasy Award in the 15th JSA Award National Specialty Store Shop Staff Display Contest in 2018.

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Increased female management ratio to 9.9%.

Governance Achievements

• Transitioned to an Audit & Supervisory Board Company in 2016.
• Established a Nomination and Remuneration Committee in 2019.
• Introduced a restricted stock award system in 2021.

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to Yen depreciation.
• Increased costs due to Yen depreciation and inflation.
• Maintaining the 100-yen shop image while introducing higher-priced items.
• Competition from other 100-yen shops and the integration of OFR.
• Challenges in overseas markets (Thailand, Peru).

Mitigation Strategies

• Shifting to higher-priced items to compensate for increased costs.
• Improving product mix and controlling gross profit margin.
• Implementing cost-cutting measures (automation, self-checkout).
• Strengthening collaboration with other business units (Buona Vita, Tokino:ne).
• Focusing on wholesale business in overseas markets.
• Improving operational efficiency and cost reduction.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Increased female management ratio to 8.8% in the previous fiscal year. Promoting the use of recycled materials and female empowerment.

Governance Achievements

• Transitioned to a company with an audit and supervisory board system since fiscal year 2016. Established a Nomination and Compensation Committee in October 2019. Introduced a restricted stock compensation system in November 2021.

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to the yen's depreciation against the dollar, resulting in increased costs and the need to switch to higher-priced products.
• Decreased profitability in the previous fiscal year due to insufficient response to rapid yen depreciation.
• Challenges in overseas business due to the COVID-19 pandemic and political instability in Peru.

Mitigation Strategies

• Switching to higher-priced products for items that are no longer profitable at 100 yen.
• Increasing the sales ratio of higher-priced products.
• Improving store efficiency.
• Focusing on wholesale business in overseas markets.
• Developing locally adapted products for overseas markets (Watts.up+).

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Established an Nomination and Compensation Committee in October 2019.
• Shifted to an Audit and Supervisory Board Company in August 2016.

Climate Goals & Targets

Environmental Challenges

• Increased labor costs and rent.
• Difficulty securing sufficient personnel.
• Decreased profitability in the 100-yen shop business.
• Underperformance of fashion accessory businesses (Buona Vita and Søstrene Grene).
• Economic downturn in Peru.
• Challenges in managing overseas operations (Thailand, Vietnam).

Mitigation Strategies

• Introduction of higher-priced items (200-1000 yen) in 100-yen shops.
• Renovation of existing stores to the Watts brand.
• Strengthening consignment sales.
• Labor-saving measures in stores (automatic change machines, cashless payment systems).
• Shifting from direct management to wholesale in Malaysia and China.
• Improving product mix and location strategies for Buona Vita and Søstrene Grene.
• Providing support and guidance to overseas operations.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Watts Seibu Honkawago Pepe store won the Fantasy Award in the 15th JSA Award National Specialty Store Shop Staff Display Contest in 2018.

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Transitioned to an audit and supervisory board company in fiscal year 2016; established a nomination and compensation committee in October 2019; abolished the system of retirement allowance for directors and introduced a performance-linked stock compensation system in November 2016.

Climate Goals & Targets

Environmental Challenges

• Negative impacts of the corona shock on overseas business and fashion goods business; supply chain disruptions due to the corona shock; decreasing profitability of the fashion goods business; underperformance of the Sostrene Grene business leading to its closure; challenges in expanding the Watts brand to new locations; decreasing profitability of overseas business due to the corona shock; challenges in maintaining profitability in a mature 100-yen shop market; increasing labor and rent costs; competition from larger 100-yen shop chains.

Mitigation Strategies

• Focusing on strengthening consignment sales; continuing to review the fashion goods business; continuing overseas business focusing on wholesale; expanding the Watts brand stores; expanding the range of higher-priced goods (200-1000 yen); collaborating with discount shops; restructuring the business; improving profitability through cost reduction; introducing a new system for automated ordering and reduced staffing; implementing cashless payment options; introducing a new store format (Watts New) to improve customer appeal and developer evaluations; restructuring the organization to focus on new store openings and existing store improvements; improving the profitability of the Buona Vita business; withdrawal from the Sostrene Grene business; shifting focus to wholesale in overseas markets; cost control measures in Peru; leveraging the procurement capabilities of the Real discount shop; collaborative store openings with Real; developing new products suitable for the Watts brand; creating multiple store grades to adjust to location conditions; improving the efficiency of store renovations.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Transitioned to an audit committee company in fiscal year 2016; abolished the system of retirement allowance for directors and introduced a performance-linked stock compensation system; established a Nomination and Remuneration Committee in October 2019.

Climate Goals & Targets

Environmental Challenges

• Weakening of existing stores in the 100-yen shop business since June 2021; impact of the COVID-19 pandemic on overseas business and fashion goods business; rising import costs due to yen depreciation; increased competition in the 100-yen shop industry; need to improve inventory turnover rate.

Mitigation Strategies

• Renovation of 100 existing stores; development of alternative sourcing strategies; shift to higher-priced products; review of product mix to mitigate the decline in gross profit; introduction of new products; disposal of stagnant products; strengthening of handmade and monochrome stationery; efforts to improve profitability and growth of overseas business and fashion goods business; integration of acquired 100-yen shops (Ontsu F-Retail) and implementation of Watts' operational methods; introduction of self-service POS registers and automated ordering systems; development of new store formats (Watts New, Tokino:ne).

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Developed sustainable products using recycled materials.

Social Achievements

• Promoted diversity and inclusion, aiming for a diverse workforce based on ability and aptitude. Women's management ratio reached 9.9% (FY2023).

Governance Achievements

• Established a Sustainability Committee to address sustainability issues, including climate-related matters, chaired by the President and CEO. This aims to streamline decision-making and reporting to the board, facilitating the integration of climate-related issues into management.

Climate Goals & Targets

Environmental Challenges

• Soft performance of existing 100-yen shop sales, increased costs (energy, transportation), decreased overseas sales due to the lingering effects of COVID-19.
• Increased costs due to rising energy and transportation costs.

Mitigation Strategies

• Increased sales of non-100-yen products to improve gross profit margin.
• Aggressive closure of unprofitable stores and focus on consignment-type store openings to improve operating profit margin.
• Implementation of self-service registers and automated ordering systems to maintain appropriate sales and administrative expenses.
• Structural reform of Thai operations and implementation of measures to achieve profitability in Peruvian operations (closing unprofitable stores, reducing fixed costs).
• Expansion of the new "Watts.up+" package for overseas stores.
• Development of new markets and revitalization of existing markets.

Supply Chain Management

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Sustainable products using recycled materials

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Development of sustainable products using recycled materials.

Social Achievements

• Promoting diversity and inclusion, with a 9.9% female management ratio in FY2023.
• Encouraging work-life balance through initiatives like paid leave and paternity leave.

Governance Achievements

• Establishment of a Sustainability Committee chaired by the President, improving decision-making and reporting processes.

Climate Goals & Targets

Environmental Challenges

• Decreased sales of masks and disinfectants following the easing of COVID-19 restrictions.
• Product shortages due to the timing of the automated ordering system and large-scale product changes.
• Staff shortages due to rapid expansion.

Mitigation Strategies

• Improved existing store sales.
• Watts brand sales increased year-on-year.
• Implementation of full self-service registers to improve efficiency and reduce labor costs.
• Utilization of POS data to optimize inventory management and improve sales analysis.
• Expansion of high-value product offerings.

Supply Chain Management

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Sustainable products using recycled materials

Environmental Metrics

ESG Focus Areas

• Governance
• Human Capital
• Environmental Sustainability

Environmental Achievements

• Introduced environmentally conscious shopping bags.
• Implemented in-house paperless initiatives.
• Converted in-store lighting to LEDs.

Social Achievements

• OFF-JT training for store operation staff (3 times/year, tiered training).
• On-the-job training (OJT) using coaching methods and a PDCA cycle.
• Targets 15% female representation in management positions (8.8% as of August 2024).

Governance Achievements

• Established a Nomination and Compensation Committee.
• Implemented a performance-based compensation system for directors.
• Introduced a restricted stock compensation plan for directors (excluding audit committee members and outside directors).

Climate Goals & Targets

Environmental Challenges

• Low PBR (0.79 as of August 2024)
• Female representation in management (8.8% as of August 2024, target 15%).

Mitigation Strategies

• Efforts to improve PBR.
• Active pursuit of mid-career hiring to increase diversity in core personnel.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Human Resources
• Environmental
• Governance

Environmental Achievements

• Completed LED lighting switch in 37 shops in FY8/22 (59 million yen investment)

Social Achievements

• Female managers accounted for 10% (FY8/22)
• Encourage employees to take paid holidays and childcare leave

Governance Achievements

• Established the Sustainability Committee chaired by the President

Climate Goals & Targets

Environmental Challenges

• High cost of sales ratio and rising utility costs
• Proactive renovation of large-scale shops and FLET'S brand shops acquired through M&A
• Deteriorating domestic environment in Peru

Mitigation Strategies

• Continued improvement in the cost of sales ratio in the 100-Yen shop business
• Decrease in overseas wholesale sales with low gross margins
• Structural reform of Thai business and improve the performance of Peru business

Supply Chain Management

Climate-Related Risks & Opportunities