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At its executive board meeting held December 18, 2008, FAST RETAILING CO., LTD. decided to liquidate one of its consolidated subsidiaries, footwear retailer VIEWCOMPANY CO., LTD.

１．Reason for liquidation decision

The operation managed by VIEWCOMPANY CO., LTD. was transferred to FR consolidated subsidiary GOV RETAILING CO., LTD. on August 20, 2008 and VIEWCOMPANY is currently settling outstanding business. We have now ascertained a timeframe for completion of unsettled business and so we have determined to liquidate VIEWCOMPANY on February 20, 2009.

２．VIEWCOMPANY CO., LTD. overview

３．Consolidated business forecasts

We expect minimal impact from this decision on FAST RETAILNG business performance for the year to end August 2009 on both a parent only and consolidated basis.

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FAST RETAILING CO., LTD. and three other partners have reached an agreement to establish a joint venture company, CPAT (SINGAPORE) PRIVATE LTD., with the aim of fabric and garment manufacturing in the People’s Republic of Bangladesh. Chinese firms Pacific Textiles Holdings Limited and Crystal International Limited are to join the venture along with Ananta Group of Bangladesh. 

１．　Establishing a joint venture in Bangladesh

While UNIQLO is currently developing its global operation, approximately 90% of all UNIQLO products continue to be manufactured in China. In line with our increasingly global store network, we seek also to globalize our manufacturing structure. To that aim, as our UNIQLO operation grows and expands worldwide, we will be looking to locate approximately one third of total production in countries outside of China. The manufacturing partners that support production of our high quality UNIQLO products are all extremely capable companies. As UNIQLO operations expand, likewise the expansion of production bases for our partner companies will be a key management issue going forward. We believe that supporting the global development of each partner will ultimately contribute positively to the globalization of FAST RETAILING itself. The agreement for this latest joint venture is a direct result of this strategy.

The new joint venture company CPAT will be expected to conduct manufacturing activities and set up both Fabric manufacturing and garment manufacturing plants in Bangladesh. We also reached a separate agreement today to set up a joint venture between Chinese firm Bros Eastern Company Ltd. and CPAT with the aim of establishing a spinning plant in Bangladesh.

２．　The CPAT joint venture company

Company name :         CPAT (SINGAPORE) PRIVATE LTD.
Location  :                   Republic of Singapore
Main business areas :   Operation of apparel-related production plants in Bangladesh
Total capital  :              80 million US dollars (combined total for four companies)
FR investment total :    8 million US dollars（10% investment ratio)
Establish company :     January, 2009 (tentative)
Open for business :      By end 2009 (tentative)

３．　FR partner companies in Bangladesh venture

（１）Pacific Textiles Holdings Limited

The group of companies spearheaded by Pacific Textiles Holdings Limited manufactures fiber for knitwear products with production bases in China and Sri Lanka. The firm provides extensive, high value-added fiber for a broad range of products. The company has recently been successfully diversifying into non-apparel end markets providing fabric for automobiles, etc. The firm also successfully listed on the Hong Kong Stock Exchange in May 2007.
The Pacific Group boasted net sales of 4,280 million Hong Kong dollars in FY2007.

（２）　Crystal International Limited

The group of companies spearheaded by Crystal International Limited manufactures garment and is developing an increasingly global presence. With an annual manufacturing capacity of 200 million units, Crystal supplies UNIQLO and many of the world’s famous fashion brands including M&S and GAP.
The Crystal group forecasts net sales of 868 million US dollars for FY2008.

（３）　Ananta Group

Ananta Group is investing in the CPAT (SINGAPORE) PRIVATE LTD through Trendit Corporation, owned by the same shareholders. Ananta is a fast-growing garment manufacturer in Bangladesh with a wide range of product development capabilities. The Group has an annual production capacity of 12 million garment and employs over 6,000 direct staff in its state-of-the-art facilities. Ananta’s customers include top brand retailers from the United States and Western European countries including GAP and H&M.

The Ananta group forecasts net sales of 40 million US dollars for FY2008.

（４）　Bros Eastern Company Ltd.

The group of companies spearheaded by Bros Eastern Company Ltd. operates spinning plants throughout Mainland China. It owns multiple cotton processing plants across China to ensure a steady supply of raw materials. Through the use of non-polluting dyes, the company’s Ningbo cotton yarn dyeing plant is proven ecologically sound.  
The Bros group forecasts net sales of 2.9 billion Chinese Yuan for FY2008.

（Reference: Overview of planned joint venture company）

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We have confirmed a problem with our KIDS (GIRLS) Stretch Slim Straight Jeans product went on sale in our UNIQLO stores in Japan and through our e-commerce site on April 21, 2008 . We have noted 11 cases (2 among the 64,998 items already sold, and 9 among 16,145 inventory items) where the heart-shaped rivets on the jeans have been ineptly attached causing part of the inside of the rivet to stick out.

Given that the rivet could scratch the skin when worn, we have decided to recall the products already sold and offer a full refund.

We are working to strengthen our product quality control system even further to avoid any such occurrence in the future. We ask for the kind understanding and cooperation of our customers and interested parties in this matter.

1.　Products in question

2.　Recall process:

Method of informing customers:

  1)　Newspaper advertisements:
   Newspaper advertisement: In the morning editions of 5 national and 3 regional dailies mainly on November 14, 2008, with some on November 15, 2008.

  2)　Information on company website
            http://www.uniqlo.com/jp/　
            http://www.fastretailing.com/jp/
            http://store.uniqlo.com/jp/
   *　You can check the product against a picture on the website

Method of recall:

  1)　In the case of bringing any of the products to a UNIQLO store, please bring it to your nearest UNIQLO store for an immediate cash refund.

  2)　If you are planning to post any of the products, please send it as payment on delivery. Please write clearly your name, address, post code and telephone number and we will send you a cash refund by registered mail.
     Please post any items to:
    Product Recall Team, Yamaguchi Head Office, UNIQLO CO., LTD.
    717-1 Sayama, Yamaguchi city, Yamaguchi Prefecture, 754-0894 

  *　Any personal data received from customers including their name, address and telephone number will be used for the purposes of this recall only and will be destroyed once the recall process has been completed.

3.　Product Recall Help Desk

If you have any queries regarding this product recall, please call UNIQLO CO., LTD. on free dial 0120-760-296
（*　From 9.00 am, Tuesday September 30, 2008 (everyday 9:00-17:00 JST)).

4.　Future procedures

We fully accept the gravity of this incident and are working to avoid any such repetition by reviewing and reconfiguring relevant areas of our quality control management system.

【Picture of product in question】

The red dotted circle marks the spots where the aforementioned problem has occurred.

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At its executive board meeting held on November 10, 2008, FAST RETAILING CO., LTD. decided to conduct its retained earnings dividend base date August 31, 2008. The details of this dividend payout are laid out below.

Dividend breakdown

（Reference）Breakdown of annual dividend

* This document is an English version of a statement written in Japanese. The Japanese original should be considered as the primary version.

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Please see below the current list of entrusted operating officers for the FAST RETAILING group as of November 1, 2008.

Entrusted operating officer appointments across the FAST RETAILING group (as of November 1, 2008)

■　FAST RETAILING CO., LTD. 　

【REFERENCE MATERIALS】
Top personnel at major FAST RETAILING group companies

■　【Board of Directors and Statutory Auditors of FAST RETAILING CO., LTD.】
(as of November 1, 2008)

Note:
Mr. Hambayashi, Mr. Hattori and Mr. Murayama are external directors as stipulated under Article 2, Section 15 of Japanese company law. Furthermore, Messrs Yasumoto, Shimizu, Watanabe, and Ota have been appointed external auditors as stipulated under Article 2, Section 16 of the Japanese corporate law.
All of the above director appointments are subject to selection at the FAST RETAILING CO., LTD. general shareholder’s meeting scheduled for November 27, 2008.

■　【Board of Directors and Statutory Auditors of UNIQLO CO., LTD.】
(as of November 1, 2008)

Note:
Mr. Matsushita is an external director as stipulated under Article 2, Section 15 of Japanese company law. Furthermore, Mr. Yasumoto and Mr. Shimizu have been appointed external auditors as stipulated under Article 2, Section 16 of the Japanese corporate law.
All of the above director appointments are subject to selection at the UNIQLO CO., LTD. general shareholder’s meeting scheduled for November 27, 2008.

■　【Top personnel at non-Japan UNIQLO businesses】(as of November 1, 2008)

■　【Top personnel at non UNIQLO businesses】(as of November 1, 2008)

■　【Equity method affiliated company】(as of November 1, 2008)

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Consolidated results

【Summary】　FR profits leap in the year to August 2008

FAST RETAILING CO., LTD. enjoyed an impressive rise in both revenue and profit in the year ending August 31, 2008. Net sales rose 11.7% year on year to ¥ 586.4bln, operating income rose 34.7% year on year to ¥ 87.4bln and net profit rose 37.0% year on year to ¥ 43.5bln.

We enjoyed a very large increase in revenue at our mainstay UNIQLO Japan operation. Our gross profit margin improved on the back of favorable sales and strong control over discounting. Expenses ratio also improved due to business overheads. UNIQLO operations in the Asian region including China, Hong Kong and South Korea continued to expand favorably. In addition, profitability at UNIQLO USA improved winning us the first full business year in the black for UNIQLO International as a whole. CABIN CO., LTD., one of our Japan Apparel subsidiaries achieved an operating profit for the year. However, our Global Brands operation (including brands such as COMPTOIR DES COTONNIERS, and PRINCESSE TAM.TAM) suffered a business correction during the six months from February on account of the worsening European economic climate. We are planning a year-end dividend of 65 yen per share, bringing the full-year dividend per share to 130 yen for the year to August 2008.

For the coming business year through end August 2009, we are forecasting consolidated net sales of ¥ 620.0bln (up 5.7% year on year), operating income of ¥ 93.0bln (up 6.3% year on year), and a profit per share of 471.28 yen. We predict further rises for the year in both revenue and profit based firstly upon an expected continued strong performance at UNIQLO Japan, further growth in profit at UNIQLO International, and a reduction in losses at the Japan Apparel operation. We are planning to increase our dividend for the year ending August 2009 to 150 yen per share including an interim dividend of 75 yen.

■　UNIQLO Japan

Our UNIQLO Japan operation, which constitutes a 79% share of consolidated net sales, enjoyed an 8.9% increase in overall net sales for the year to end August 2008 and an impressive 35.0% year-on-year increase in operating income to ¥ 86.4bln. A favorable 2.9% increase in existing store sales and the net addition of 10 new UNIQLO stores contributed to this strong rise in revenue. The number of UNIQLO stores totaled 740 at the end of August 2008, or 749 stores including franchises. Our gross profit margin improved considerably over the year, rising 3.1 points to 48.5%. We gained a firm control over discounting with all those involved in sales, merchandising and inventory control committed to maximizing profits. Favorable sales throughout the business year reduced the need to offload inventory, and an early launch of new season ranges helped boost our gross profit margin.

We also saw considerable efficiencies gained and savings made on the cost front. We were able to improve our personnel to net sales ratio by 0.5 points thanks to more efficient in-store management, and less time-consuming staff recruitment and training following the introduction of our regional employee system. We successfully boosted customer numbers through our campaign promotions including the Bottoms Campaign and the Bra Top Campaign while at the same time shaving 0.3 point off of our advertising and promotion costs to net sales ratio.

We expect to open large-scale stores (floor space around 1,600sqm) during the year to August 2009. Our plan is to open 24 new large-scale stores and boost total UNIQLO Japan stores by 19 by the end of the year. At the same time, we expect to be able to maintain gross profit to net sales ratio roughly at the 2008 business year level by continuing to make flexible production volume adjustments and control discounting. The Japanese consumer environment is likely to prove tough during the coming year. With this in mind, we plan to forge ahead with our development of revolutionary products, and further strengthen our campaign-focused sales prowess. We estimate a rise in both revenue and profit for the year ending August 2009 at UNIQLO Japan with net sales forecast to 4.3% year on year to ¥ 482.0bln, and operating income to rise 4.2% to ¥ 90.0bln.

Net sales at UNIQLO International rose roughly 72.6% year on year in the year ending August 2008 to ¥ 29.3bln and the overall operation enjoyed its first annual operating profit. The cost of opening our global flagship store on London’s Oxford Street in November 2007 generated a loss in the UK. However, net sales expanded favorably in Asia (China, Hong Kong and South Korea) and profitably improved markedly at UNIQLO USA. Sales continued to expand at our New York SOHO global flagship store opened in November 2006, bringing the UNIQLO USA operation close to the black for the year.

During the year to end August 2009 at UNIQLO International, we plan to forge ahead with aggressive store openings in the Asian markets of China, Hong Kong and South Korea. We expect to open our first store in Singapore in Spring 2009, and are looking to double the number of UNIQLO stores in Asia to 78 by the end of the year. With the predicted improvement in profitably at our UK global flagship store, we estimate net sales for UNIQLO International of ¥ 41.0bln and an operating income of ¥ 1.0bln for the year ending August 2009. Autumn 2009 will see the opening of our global flagship store in Opera, central Paris.

Business results for the Japan Apparel segment came in roughly in line with expectations for the year ending August 2008. Improvements in business operations instituted at CABIN helped generate an operating profit there over the full fiscal year. Our low-cost casual brand G.U. performed as expected. Losses at footwear retailer ONEZONE CORPORATION were reduced as more unprofitable stores were closed. However, fellow footwear retailer VIEWCOMPANY (newly incorporated as a consolidated subsidiary from the second half) under performed.

In the year to August 2009, we expect the Japan Apparel segment to generate net sales of ¥ 50.0bln. This is turn should help us reduce the segment’s operating loss to ¥ 1.0bln. We will be looking to boost profits at CABIN by continuing to focus management resources on refining and promoting core brands such as ZAZIE and enracine. Management restructuring of the segment will continue following the merger of G.U., ONEZONE and VIEWCOMPANY business operations and the launch of GOV RETAILING CO., LTD. on September 1, 2008. More concretely, we are looking to reduce unit costs and half the operating loss generated by these three operations. We plan to do this by merging the three companies’ formerly separate head office functions and by unifying production and procurement under the FR group umbrella.

Our Global Brands operation entered a correction phase in the six months from February through August 2008 as the European economic climate worsened. The segment generated overall net sales of ¥ 43.7bln and an operating income of ¥ 7.7bln. Our COMPTOIR DES COTONNIERS brand missed its target and suffered a fall in profits. PRINCESSE TAM.TAM profits were in line with expectations.

In view of the slowdown in European economic conditions, we are planning to sustain both new store openings and overheads in the year through end August 2009. We expect revenue to increase but income to shrink somewhat over the year for the Global Brands segment as a whole.

Consolidated business forecasts for the year to end August 2009 include a 5.7% year-on-year increase in overall net sales to ¥ 620.0bln, a 6.3% rise in operating income to ¥ 93.0bln and a profit per share of 471.28 yen. Further increases in revenue and income at our mainstay UNIQLO Japan operation, an expanded profit at UNIQLO International, and reduced losses at our Japan Apparel operation are all expected to contribute to rising consolidated revenue and rising consolidated income for the year. We are expecting to increase our shareholder dividend to 150 yen per share for the year to end August 2009 that includes an interim dividend of 75 yen.

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A newspaper has published an article dated October 9, 2008 regarding a partial amendment to FAST RETAILING’s articles of incorporation on preferred stock. FAST RETAILING has made no such announcement and the information incorporated in the article did not originate from ourselves.

We have confirmed a problem with some small-sized blankets (with carry case) and in-door shoes that went on sale in our UNIQLO stores in Japan and through our e-commerce site on July 28, 2008. Metal fragments from the fabric raising brush were found in 17 products (1 case out of 16,184 products sold, and 16 cases in 63,189 warehoused items). The products in question are the Boa Fleece Blanket & Bag (plain), the Fleece Blanket & Bag (check, geometric design and patterned), and our Boa Fleece Room Shoes range.

As a result of this finding, we have decided to recall and refund any such product already sold the details of which are laid out below.

We are already working to strengthen our product quality control system even further to avoid any such occurrence in the future. We ask for the kind understanding and cooperation of our customers and interested parties in this matter.

1.　Products in question

Total Items Sold     16,184

2.　Recall process:

Method of informing customers:

  1)　Newspaper advertisements:
   (September 30, 2008 morning edition, 5 national 3 regional dailies)

  2)　Information on company home pages
            http://www.uniqlo.com/jp/　
            http://www.fastretailing.com/jp/
            http://store.uniqlo.com/jp/
   *　Purchasers can double check using images of each product on the above websites.

Method of recall:

  1)　In the case of bringing any of the products to a UNIQLO store, please bring it
    to your nearest UNIQLO store for an immediate cash refund.

  2)　If you are planning to post any of the products, please send it as payment on delivery.
    Please write clearly your name, address, post code and telephone number and we will
    send you a cash refund by registered mail.
     Please post any items to:
    Product Recall Team, Yamaguchi Head Office, UNIQLO CO., LTD.
    717-1 Sayama, Yamaguchi city, Yamaguchi Prefecture, 754-0894 

  *　Any personal data received from customers including their name, address and telephone number will be used for the purposes of this recall only and will be destroyed once the recall process has been completed.

3.　Product Recall Help Desk

If you have any queries regarding this product recall, please call UNIQLO CO., LTD. on free dial 0120-760-296（*　From 9.00 am, Tuesday September 30, 2008 (everyday 9:00-17:00 JST)).

4.　Future procedures

We fully accept the gravity of this incident and are already working to avoid any such repetition by reviewing and reconfiguring relevant areas of our quality control management system.

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A newspaper published an article dated September 25 regarding FAST RETAILING’s business forecasts and dividend policy for the year ended August 2008. FAST RETAILING has made no such announcement and the information incorporated in the article did not originate from us.

We are scheduled to announce our business results for the year to end August 2008 on October 9, 2008.

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In an attempt to establish a solid business presence in Singapore for its UNIQLO brand casual clothes, FAST RETAILING has established a joint venture firm along with Singapore’s leading retailer Wing Tai Retail Pte. Ltd. Further details on this venture are listed below:

1.　Business name:
      UNIQLO (SINGAPORE) PTE.LTD.

2.　Location:
      Republic of Singapore

3.　Business representative:
      Managing Director
      Satoshi Onoguchi
      (curennt Director of Singapore Business Project, FAST RETAILING CO., LTD.)
      Managing Director
      Albert Chew
      (current Finance Manager, Wing Tai Retail Pte. Ltd. )

4.　Capital:
      100 Singapore dollars (equivalent 7,700 yen)

5.　Business year end:
      August

6.　Investment partners and proportions:
      FAST RETAILING CO., LTD.      51.0%
      Wing Tai Retail Pte. Ltd.      49.0%

7.　Date for establishment of joint venture:
      August 20, 2008

8.　Business operation:
      The sale of UNIQLO brand casual clothing in Singapore

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As announced in our news release of July 10 (Japan Apparel companies to merge operations), FAST RETAILING decided to merge operations among three of its consolidated subsidiaries, low-cost casual brand G.U. CO., LTD., and footwear retailers ONEZONE CORPORATION and VIEWCOLMPANY CO., LTD. The merger went into effect today September 1, when the freshly amalgamated firms began operating under the new company name GOV RETAILING CO., LTD. (pronounced G.O.V.).

The aim of this merger is to boost corporate management efficiency by merging functions between the three companies such as sales, products, marketing, etc. In addition, we are looking to boost efficiency and coordination in areas of manufacturing, R&D, systems and administrative management by strengthening links with FR Group holding company FAST RETAILING and mainstay UNIQLO company.

We will continue to develop our low-cost g.u. casual brand clothing, previously managed by G.U. CO., LTD., by developing extremely reasonably priced fashionable garments in order to win fresh customer support for the brand.

In footwear such as ONEZONE’s FOOTPARK chain and VIEWCOMPANY’s vju brand, we will be looking to develop original design products that offer a valuable combination of fashion sense, functionality and comfort.

As a new company within the FAST RETAILING group, for GOV RETAILING the year to August 2009 should be viewed as the second creative stage for its businesses as we continue the transformations currently underway.

Overview of GOV RETAILING CO., LTD.

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Consolidated results

【Summary】　Profits continue to rise significantly during 3 months to May

FAST RETAILING generated another significant rise in both revenue and profit in the third quarter from March to May 2008 following on from the strong first half performance. Sales promotions at our mainstay UNIQLO Japan operation met with considerable success helping to boost existing store sales by 4.2% year on year. In addition, UNIQLO Japan was able to improve our gross profit margins and cost ratios, generating a higher than expected level of operating income.

UNIQLO International posted a cumulative profit in the first nine months to May 2008. UNIQLO operations in China, Hong Kong and South Korea continued to expand favorably, and performance at our New York global flagship store was also favorable. Our Japan Apparel segment posted a small profit in the March to May period thanks to improved profitability at both our women’s fashion retailer CABIN and footwear retailer ONEZONE CORPORATION subsidiaries. On the other hand, profits from our Global Brands segment were flat in the third quarter due to the deterioration in the European consumption environment.

Our consolidated business forecasts for the full year to August 2008 remain unchanged from the estimates announced along with our interim results on April 10. We estimate overall net sales will rise 11.5% year on year to ¥ 585.5bln and operating income will rise 23.4% to ¥ 80.1bln, generating a profit per share of 403.33 yen. We are forecasting an annual dividend per share of 130 yen, including the interim dividend payment of 65 yen already distributed.  

Finally, we took the decision today to go ahead with a business merger between three of our Japan Apparel subsidiaries (low cost casual wear brand developer G.U. CO., LTD., and footwear retailers ONEZONE CORPORATION and VIEWCOMPANY CO., LTD.) effective September 1, 2008. The newly merged company will strive to create a new style of shoe business within the footwear industry, and the cheapest quality clothes in the low-cost clothing market. We are expecting to account a special loss of ¥ 1.8bln in the year to August 31, 2008 in relation to this three-company merger.

■　UNIQLO Japan

Our UNIQLO Japan operation accounts for roughly 80% of FAST RETAILING consolidated net sales. In the three months to May, UNIQLO Japan enjoyed an increase in revenue, and, thanks to improvements in both our gross profit to net sales and cost to net sales ratios, UNIQLO Japan operating income exceeded target. Existing store net sales increased a favorable 4.2% year on year in the third quarter from March to May. Factors underlying this strong performance include: a) the stronger appreciation of UNIQLO’s high quality, functional material garments, b) our success in creating clearer standout displays for easy purchase by increasing store inventory of mainstay garments such as our cotton T-shirts, denim, etc., and, c) our successful promotion campaigns. The campaigns conducted in the third quarter were designed to boost the image of our women’s wear such as our New Shapely Leg Bottoms Campaign by Japanese beauty queen Norika Fujiwara and our Bra Top Campaign by Japanese actress Kazue Fukiishi. These were the first for UNIQLO to appeal only to female customers through TV commercials and helped attract customers. Our store openings & closures were conducted roughly to plan with a net increase of 11 stores boosting our total number to 741 direct-run stores at end May 2008 (759 including franchise stores).

Our gross profit to net sales ratio outstripped target in the third quarter from March to May, improving by 2.4 points compared to the previous year as we exercised stronger control over discounting. Our SG&A cost ratio improved 1.4 points year on year as the advent of our regional employee system helped reduce time spent hiring and training new personnel, and our efforts to improve operational store efficiency led to a rise in productivity.

Our forecasts for the full year to August 2008 for UNIQLO Japan remain unchanged with net sales expected to rise 8.1% year on year to ¥ 459.2bln, and operating income expected to rise 23.9% to ¥ 79.2bln.

■　UNIQLO International

UNIQLO International again managed to turn a slight profit in the third quarter from March to May with net sales rising 71.8% year on year. Within the segment, business in the Asian region of China, Hong Kong and South Korea continues to expand favorably, and the financial balance at our US operation has also improved since the opening of our global flagship store in New York in November 2006. Our full-year forecasts through end August 2008 for UNIQLO International remain unchanged with net sales predicted to rise 76.5% to ¥ 30.0bln and the operating loss expected to shrink from the previous year’s ¥ 1.1bln to ¥ 0.4bln.

■　Japan Apparel

Our Japan Apparel segment posted a slight profit in the third quarter (March to May). The impact of cost cuts at CABIN generated a higher than expected profit there, and profitability at ONEZONE improved during this quarter of traditionally buoyant demand. Our forecasts for the Japan Apparel operation for the full year through August 2008 remain unchanged with net sales expected to rise 10.4% year on year to ¥ 50.8bln, and the operating loss to shrink from the previous year’s ¥ 3.5bln to ¥ 2.7bln. Profit and loss figures for women’s footwear subsidiary VIEWCOMPANY CO. LTD are included in the consolidated profit and loss statement from this third quarter.

Having considered the matter since April this year, we have now taken the decision to merge three of our Japan Apparel subsidiaries (low-cost casual wear brand developer G.U. CO., LTD., and footwear retailers ONEZONE CORPORATION, and VIEWCOMPANY CO., LTD.) effective September 1, 2008. The newly merged company will strive to create a new style of shoe business within the footwear industry, and the cheapest quality clothes in the low-cost clothing market. We are looking to further improve profitability by boosting the new company’s operational efficiency through the merger of production, product, marketing, supervision and management planning functions. We are expecting to account a special loss of ¥ 1.8bln in the year to August 31, 2008 as the three-company merger results in inevitable store closures and office transfers. 

■　Global Brands

Our Global Brands operation did not meet its targets for the third quarter from March to May. When the data are viewed on a real basis adjusted for differing business periods, revenue actually rose 8% year on year and operating income was roughly flat. The developer of the casual wear Comptoir des Cotonniers brand in France and other parts of Europe failed to reach its sales target owing to the deteriorating consumption environment in Europe. However, it still managed to generate a rise in both revenue and profit. Our full year business forecasts for the Global Brands segment remain unchanged with net sales expected to rise 17.0% year on year to ¥ 43.0bln and operating income expected to rise ¥ 3.2% year on year to ¥ 7.4bln.  

■　Business forecasts for the full year to August 2008

 While our UNIQLO Japan operation outperformed on the profit front in the third quarter, forecasts for the full year remain unchanged. As a result, our consolidated business estimates for the year to end August 2008 indicate an 11.5% year-on-year increase in overall net sales to ¥ 585.5bln and a 23.4% rise in operating income to ¥ 80.1bln generating a profit per share of 403.33 yen. We are forecasting an annual dividend per share of 130 yen, including the interim dividend payment of 65 yen already distributed.  

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As stated in our press release dated April 1, 2008 entitled “Basic agreement on business integration among FR Japan Apparel firms”, FAST RETAILING CO., LTD. has been studying a possible operational merger between three of its consolidated subsidiaries; low-cost casual wear brand G.U. CO., LTD., and footwear retailers ONEZONE CORPORATION, and VIEWCOMPANY CO., LTD., FAST RETAILING finalized the overall content and schedule of such a merger at our board meeting held today.

The fundamental objective of this move is for FAST RETAILING to take a leading role in fully utilizing the management resources of the Group including the UNIQLO operation, and to advance the establishment of a footwear operation and a low price casual clothing operation that can offer the customer fresh value.

1.　Management merger implementation - the timing & method

We considered the best way to realize the establishment of a footwear operation and a low price casual clothing operation with FAST RETAILING as the main driving force. We also studied the possibility of merging operations of our three group subsidiaries currently involved in developing our footwear and low price casual clothing operation. As a result, we decided the optimum way forward was to merge the three companies operations into one.

The business integration will be achieved by the current G.U. and VIEWCOMPANY operations being devolved to ONEZONE CORPORATION.

The scheduled transfer of operations currently performed by VIEWCOMPANY will take place on August 20, 2008, while the operations currently performed by G.U. will be assigned on August 31, 2008. The new company is thus expected to begin operations from September 1, 2008. The schedule business merger is however subject to completion of the incorporation of VIEWCOMPANY as a fully owned FR subsidiary.

2.　Business forecasts

We forecast this planned business merger may generate a special loss of approximately ¥ 1.8bln for the year ending August 2008.

3.　The three group companies

G.U. CO., LTD. began operations in October 2006 to develop the g.u. casual wear brand. With 50 stores in operation by end August 2007, we are currently working to expand the store network.
ONEZONE CORPORATION operates specialty footwear stores nationwide such as the FOOTPARK chain. FAST RETAILING purchased ONEZONE outright in March 2005 as part of our strategy to break into the footwear retail market.

VIEWCOMPANY CO., LTD. operates chain stores specializing in women’s footwear such as vju: As announced on March 19, 2008, FAST RETAILING is currently in the process of making VIEWCOMPANY a fully owned subsidiary.

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FAST RETAILING CO., LTD. has transferred its entire stock holding in FR consolidated subsidiary ASPESI JAPAN CO., LTD. to Alberto Aspesi & C S.p.A.

1.　Details of stock sale

(1)　Stock for delivery

FR holding of ASPESI JAPAN stock (approximately 60% of ASPESI JAPAN total outstanding shares)

(2)　Stock recipient

Company Name ：   Alberto Aspesi & C S.p.A.
Representative ：   Alberto Aspesi
HQ Location ：   Legnano, Italy
Business Type ：   Design, manufacture and sale of Aspesi brand clothing

2.　Impact on FR consolidated results

We envisage any impact on FR results for the year ending August 2008 will be minimal. As a result of this decision however, ASPESI JAPAN will no longer be treated as an FR consolidated subsidiary.

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Please see below the current list of entrusted operating officers for the FAST RETAILING group as of May 16, 2008.

Entrusted operating officer appointments across the FAST RETAILING group (as of May 16, 2008)

■　FAST RETAILING CO., LTD. 　

■　UNIQLO CO., LTD.　

■　FR FRANCE S.A.S. ［France］

■　CABIN CO., LTD.　

■　G.U. CO., LTD.

■　ONEZONE CORPORATION

■　FAST RETAILING(CHINA)TRADING CO., LTD.［CHINA］, UNIQLO HONG KONG, LIMITED［Hong Kong］

【REFERENCE MATERIALS】
Top personnel at major FAST RETAILING group companies

■　【Board of Directors and Statutory Auditors of FAST RETAILING CO., LTD.】
(as of May 16, 2008)

Note:
Mr. Hambayashi, Mr. Hattori and Mr. Murayama are external directors as stipulated under Article 2, Section 15 of Japanese company law. Furthermore, Messrs Yasumoto, Shimizu, Watanabe, and Ota have been appointed external auditors as stipulated under Article 2, Section 16 of the Japanese corporate law.

■　【Board of Directors and Statutory Auditors of UNIQLO CO., LTD.】
(as of May 16, 2008)

Note:
Mr. Matsushita is an external director as stipulated under Article 2, Section 15 of Japanese company law. Furthermore, Mr. Yasumoto and Mr. Shimizu have been appointed external auditors as stipulated under Article 2, Section 16 of the Japanese corporate law.

■　【Top personnel at non-Japan UNIQLO businesses】(as of May 16, 2008)

■　【Top personnel at non UNIQLO businesses】(as of May 16, 2008)

■　【Equity method affiliated company】(as of May 16, 2008)

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Consolidated results

【Summary】　Profits leap in first half to February 08

FAST RETAILING achieved a significant increase in profit in its interim results for the six months from September 2007 through February 2008. Net sales increased 11.3% year on year to¥ 316.4bln, operating income increased 25.8% to¥ 54.2bln and net income increased 26.3% to¥ 28.6bln.

We enjoyed an increase in both income and profit at our mainstay UNIQLO Japan operation with net sales and operating income both exceeding forecasts. The strong performance by core winter products such as HEAT TECH inner wear, cashmere sweaters and down jackets greatly reduced the need for later discounting. UNIQLO International posted its first interim profit thanks to firm results from our UNIQLO New York global flagship store, and our continued favorable business expansion in China, Hong Kong and South Korea. While our Japan Apparel operation slightly under performed versus target, our Global Brands operation continues to fulfill expectations.

We have decided to revise up our consolidated forecasts for the full business year to end August 2008 to reflect the significant out performance by UNIQLO Japan in the first half coupled with the revised forecasts for our Japan Apparel segment. Our revised consolidated full year forecasts are for net sales to increase 11.5% year on year to¥ 585.5bln and operating income to increase 23.4% year on year to¥ 80.1bln. We are predicting a profit per share of¥ 403.33. We expect to pay an interim dividend per share of 65 yen with the full year dividend in line with last year at 130 yen.
 
■　UNIQLO Japan

UNIQLO Japan constitutes 80% of total consolidated interim net sales. Net sales at UNIQLO Japan rose 8.1% year on year during the six months to February 2008 while operating income enjoyed a 24.1% increase. Interim results at UNIQLO Japan outperformed thanks to strong sales and an improvement in gross margins.

Firstly, a 1.5% year-on-year increase in existing store sales helped UNIQLO Japan achieve a higher than expected level of net sales in the first half. The warm weather back in September delayed the launch of our autumn garments dampening customer numbers and income during that month. However, sales of winter garments such as cashmere and fleece products picked up from mid October onwards once the cold weather set in. Our extremely successful promotion of HEAT TECH inner wear and down jackets during the peak winter season of November and December drew in a large number of customers and helped boost income significantly. Our HEAT TECH inner wear products proved a huge hit. Our HEAT TECH inner wear campaign promoting UNIQLO’s strengths in the use of “functional materials” was a great success with 20 million HEAT TECH items sold during the winter season.
New store openings proceeded roughly to plan in the first half with an additional 10 large-scale with about 1,600 square meters of sales space stores opening for business during the period. Total store numbers at end February reached 738 stores (757 including franchises). That represents an increase of 25 stores compared to the previous year.

On the income side, the strong performance by our core products reduced the need for discounting during the season. This in turn helped boost gross profit margins beyond expectations, with an improvement of 3.1 points over the previous year. From a cost perspective, our SG&A expense to net sales ratio rose 0.6 point year on year. Personnel costs increased on the back of expanded hires and recruitment of regional employees. Store rents rose as the number of new stores opening in more prestigious shopping centers increased. 

We have already revised forecasts for UNIQLO Japan new store openings in the second half to August 2008 due to the delay in the opening of new shopping centers affected by revisions to the Japanese building code. However, we have revised up our expectations for second half existing store sales from an initial increase of 0.2% year on year to a 1.9% increase year on year. This reflects the favorable launch of spring garments and the 8.1% increase in existing store sales already recorded for March. As a result, we have revised up our full year forecasts for UNIQLO Japan to net sales of¥ 459.2bln (up 8.1% year on year), and operating income of¥ 79.2bln (up 23.9% year on year).

■　UNIQLO International

Our UNIQLO International operation turned last year’s interim loss into its first interim profit this time. This was due to improved finances at UNIQLO USA where we opened our global flagship store in November 2006, and our continued favorable business expansion in China, Hong Kong and South Korea.

Following the opening of our New York global flagship store, we then opened a global flagship store on London’s Oxford Street in November 2007. We are currently planning the opening of our third global flagship store in Paris’s Opera in Autumn 2009. We are already enjoying enthusiastic support from Parisian customers at our first French UNIQLO store opened in the Parisian suburb of La Defense in December 2007.

We are predicting overall net sales for UNIQLO International for the full year to end August to increase 76.5% year on year to¥ 30.0bln, and the operating loss to shrink to¥ 0.4bln.

■　Japan Apparel

CABIN CO., LTD. and G.U. CO., LTD. performed in line with expectations during the first half, but the competitive environment for footwear developer ONEZONE CORPORATION was  tough and the subsidiary under performed as a result.

Focuses here for the second half include achieving a full year profit at CABIN by boosting efficiency and concentrating on core brands. In addition, we are looking to strengthen the women’s fashion component at our low-cost casual G.U. brand and to expand sales per store and boost overall profitability. Consolidated subsidiary VIEWCOMPANY will be incorporated into the FR accounts from the second half following the tender offer completed in February 2008. As a result, we have revised the full-year net sales estimate for our Japan Apparel segment to¥ 50.8bln. Given the slight delay on our initial plan to reduce operating losses and improving performance at ONEZONE and G.U., we have revised our full-year operating loss forecast for the Japan Apparel operation to¥ 2.7bln (The actual operating loss for the previous year to August 2007 was¥ 3.5bln). G.U., ONEZONE and VIEWCOMPANY signed an agreement dated April 1 to begin discussions for a possible reorganization of operations and merger of management functions. 

■　Global Brands

Our Global Brands segment performed as expected over the six months to February 2008. Customer visits to our French casual brand developer Comptoir Des Contonniers were adversely impacted by the strikes in Paris, but sales of the brand in other parts of Europe such as Spain and Italy proved strong. French lingerie brand developer PRINCESSE TAM.TAM also continues to perform favorably.

Going forward in the second half, we will continue our aggressive opening of new Comptoir Des Cotonniers stores in other parts of Europe outside France while also looking to consolidate the French market base for our PRINCESSE TAM.TAM operation. We are predicting full year net sales for our Global Brands operation of¥ 43.0bln and operating income of¥ 7.4bln.

■　Business forecasts for the year to August 2008

We have revised up our full year consolidated business forecasts for the FAST RETAILING group given the significant out performance at UNIQLO Japan in the first half, coupled with revised performance expectations at our Japan Apparel operation. We are now forecasting full year overall net sales to increase 11.5% year on year to¥ 585.5bln, and operating income to rise 23.4% year on year to¥ 80.1bln. We predict profit per share to total ¥ 403.33. We are planning an interim dividend of 65 yen and an annual dividend in line with last year at 130 yen.

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FAST RETAILING is to establish a joint venture company with Wing Tai Retail Pte. Ltd. of Singapore to facilitate the entry of its casual wear UNIQLO brand into the Singapore market. A basic agreement on the framework for the joint venture has been reached

１．UNIQLO to enter the Singapore market

FAST RETAILING has been exploring the possibility of entering the Singapore market for some time and we are now pleased to announce that we have agreed a basic framework for establishing a joint venture company with our new partner Wing Tai Retail Pte. Ltd.. Wing Tai Retail Pte. Ltd. is a wholly owned subsidiary of the Singapore-listed property developer and lifestyle company Wing Tai Holdings Limited Singapore.
Based upon this agreement, the new joint venture company would be established in Singapore in the business year to end August 2008, with the first UNIQLO store set to open in Singapore sometime during the following business year ending August 2009. UNIQLO is well known for its high quality, fashionable basic casual clothes that can be worn by anyone, anywhere, anytime. UNIQLO will be looking to establish a store network in Singapore and spread its appeal as a Japanese brand that offers a truly unique, fresh value through its clothes. Singapore would be UNIQLO’s fourth base in Asia following the brand’s success in China, Hong Kong and South Korea.

２．About Wing Tai Asia

Wing Tai Holdings Limited is Singapore's leading property developer and lifestyle company reputed for quality and design. The principal activity of the company is that of an investment holding company, focused on key markets in Asia. The core businesses of the Wing Tai Asia Group – which includes also USI Holdings Limited in Hong Kong and DNP Holdings Berhad in Malaysia – comprise property investment, development and management, as well as fashion retail, hospitality management and F&B franchise operations.  www.wingtaiasia.com.sg