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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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UNIQLOCK won the Grand Prix in the Titanium and Cyber Lions at the 2008 International Advertising Festival in Cannes, one of the world’s top three international advertising events. UNIQLOCK was first launched in June 2007 and now forms a key part of UNIQLO’s visual global promotion.

UNIQLOCK has already been awarded the Interactive CLIO AWARDS Grand Prix and the One Show Interactive Grand Prix. And with this new achievement, UNIQLOCK has now won accolades at all three of the world’s top international advertising events.

■　UNIQLOCK wins the Titanium and Cyber Lions Grand Prix at the Intl Advertising Festival, Cannes

UNIQLOCK, first developed by UNIQLO in June 2007, has won the Grand Prix in the Titanium and Cyber Lions of the International Advertising Festival.
The Titanium Lions prize is awarded to the entry that the hosts believe makes the industry stop and reconsider the future. In other words, the award is presented to the entrant that expresses the most original and revolutionary idea, and that leads in a stimulating, fresh direction.

In addition, the Cyber Lions launched in 1998 rewards individual creativity in Internet marketing and campaigns. The award is attracting greater attention as the number of entrants expands each year. 

UNIQLO has been concentrating heavily on its global promotion strategy via the Internet since 2006. We believe these awards prove our success in this area.

To mark our success in the Cannes Lions, we will be offering the Fantastic Plastic Machine (Tomoyuki Tanaka) track used on UNIQLOCK as an incoming call melody for mobile phones free of charge from June 23, 2008. Going forward, we will be looking to evolve UNIQLOCK into more personal user content by developing our mobile UNIQLOCK version and other ideas for the mobile handset. 

■　The Cannes International Advertising Festival

The Cannes International Advertising Festival is an international advertising event hosted by International Advertising Festival Limited with headquarters located in London. Officially called the
“International Advertising Festival”, the event is also referred to as the “Cannes Lions” after the lion trophies presented to winners. The festival is held every year in June in Cannes in the south of France to select winners for each of the ten established segments.
(Japanese site: http://www.canneslionsjapan.com/index.html)
(English site: http://www.canneslions.com/)  

■　About UNIQLOCK

UNIQLO blog parts UNIQLOCK first appeared on our home page in June 2007 as part of our polo shirt campaign. UNIQLOCK are blog parts with an inbuilt clock function. A group of girls wearing UNIQLO clothes introduce their original dance with the screen changing in time with the clock. The overriding aim is to transmit UNIQLO’s global view to the world using our MUSIC×DANCE×CLOCK form of communication that can transcend any language barrier.

At the same time, our WORLD.UNIQLOCK has become increasingly well known in the Internet world. The WORLD.UNIQLOCK page on our website shows a world map displaying the number and location of users who incorporate UNIQLOCK parts into their own blogs.

When we launched our second cashmere version of UNIQLOCK in October 2007, we had 33,481 blog parts established in 73 countries around the world.

We launched our third version of UNIQLOCK blog parts on April 28.

We currently have 41,632 blog parts established in 83 countries, and have recorded 120,900,278 page accesses as of June 23, 2008.

■　Awards won by UNIQLOCK

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UNIQLO CO., LTD.
to Japanese

UNIQLOCK has won the 2008 Interactive Grand Clio at the Clio Awards, one of the world’s top three international advertising presentations. UNIQLOCK was first launched in June 2007 and now forms a key part of UNIQLO’s visual global promotion.

This is the second such accolade presented for UNIQLOCK following the One Show Interactive Grand Prix earlier this month.

■　UNIQLOCK wins the Clio Awards Interactive Grand Clio

UNIQLOCK, the blog part launched in June 2007 as a key part of the global promotion for the UNIQLO brand, has been presented with a best-in-show Grand Clio in Interactive from the Clio Awards. The Clio Awards is a true accolade ranking one of the top three in the world along with the Cannes Lions and the One Show advertising festivals.

The Clio Awards is the second award won by UNIQLOCK of the top three awards following the One Show Interactive Grand Prix of May 15, 2008. The high level of originality and creativity displayed on UNIQLO’s website has been widely praised, winning a total of 15 prizes to date at 7 different advertising awards.

■　The Clio Awards

The Clio Awards, part of Nielsen Business Media, is one of the world’s most prestigious and recognized awards program for advertising, interactive and design. Now in its 49th year, the Clio Awards receives more than 20,000 entries from 63 countries, and an international jury of more than 100 creative experts selects Gold, Silver and Bronze Clio winners. The judges also have the option of selecting one of the Gold Clio winners as recipient of the coveted Grand Clio for best-in-show in that category. The awards are presented at the Clio Festival, held annually in South Beach. For more information, please visit （URL: http://www.clioawards.com/ ）

■　UNIQLOCK

UNIQLO blog part UNIQLOCK first appeared on our home page in June 2007 as part of our polo shirt campaign. UNIQLOCK is a blog part with a built-in clock function. A group of girls wearing UNIQLO clothes introduce their original dance with the screen changing in time with the clock. The overriding aim is to transmit UNIQLO’s global view to the world using our MUSIC×DANCE×CLOCK form of communication that can transcend any language barrier.

At the same time, our WORLD.UNIQLOCK has become increasingly well known in the Internet world. The WORLD.UNIQLOCK page on our website shows a world map displaying the number and location of users who incorporate UNIQLOCK parts into their own blogs.

When we launched our second cashmere version of UNIQLOCK in October 2007, we had 33,481 blog parts established in 73 countries around the world.

We launched our third version of UNIQLOCK blog part, “20 COLOR T”, on April 28 in which we express a strange world where live pictures and animation merge.

UNIQLO is currently aggressively expanding its global operations in New York, London, Hong Kong, South Korea and China. We will continue to design promotions focusing on our key ”global” theme.

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FAST RETAILING CO., LTD. opened its first commercial complex in Tokyo, Mina Machida, on Friday, May 23, 2008. The complex is located in the key commercial area surrounding Machida station. We have refurbished facilities that used to house the old Tokyu Hands store, a popular shopping spot spanning 25 years. We expect the new complex to contribute to the ongoing redevelopment of the Machida station area attracting local  customers from surrounding areas. The UNIQLO Mina Machida Store also opened on the same day, one of our largest stores in Eastern Japan. 

■　“Casual luxe” –  a pleasant, relaxing lifestyle to enrich daily living

・　FAST RETAILING CO., LTD. (Sayama 717-1, Yamaguchi City, Yamaguchi Prefecture, President: Tadashi Yanai) opens the urban commercial complex Mina Machida in Haramachida, Machida City, Tokyo on Friday May 23, 2008. Mina Machida is the first such FAST RETAILING facility to be located within the Tokyo area. It is the fourth facility of its kind in Japan after the Mina Tenjin facility opened in Fukuoka City, Kyushu on October 29, 2005, the Mina Tsudanama opened in Narashino City, Chiba Prefecture on November 9, 2007 and Mina Kyoto that opened April 25 this year.

・　The facility’s name Mina means a mountain of jewels in Spanish. We have a total 31 tenant stores. Our target customers are young people in their late teens and early twenties and people in their thirties with children. Our “casual luxe” concept offers a pleasant, relaxed shopping life and a “casualness” to nourish and enrich customers’ daily living.

■　Welcome one of Tokyo’s biggest UNIQLO stores!

・　We will also be opening the UNIQLO Mina Machida Store, one of our biggest in the Eastern Japan region. The long-awaited large store in Machida will offer all of UNIQLO’s best ranges with 500 different items to choose from. You can always count on UNIQLO for those vital items to suit each season.

・　Mina Machida, the first FAST RETAILING commercial complex in Tokyo Prefecture, and UNIQLO Mina Machida, one of our largest in Eastern Japan. We hope local residents will grow to love  these two facilities to help invigorate  the Machida station area.

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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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FAST RETAILING (CHINA) TRADING CO., LTD., a subsidiary of FAST RETAILING, decided to offer 3.3 million yuan’s worth of clothing (approx. ¥ 50mln) as emergency relief supplies to areas worst affected by the Sichuan earthquake which hit the area on May 12, 2008.
Many houses have collapsed and lifelines have been severed in the areas worst hit by the Sichuan earthquake. Also the temperature there is struggling to reach above 20 degree. So for helping ward off the cold and maintain hygiene, we concluded that there would be a need for clothing provisions. We will confirm exactly what sort of clothing should be provided once we have a clear grasp of what is needed on the ground. This emergency support will be the ninth occasion including the earthquake in Northern Pakistan in October 2005 on which FAST RETAILING has offered clothing as emergency relief supplies around the world.

The FAST RETAILING Group is anxious to keep on trying to offer help to people suffering in the face of natural disaster, war or terrorist activities. We know that what we can do is limited. But as we, uphold “to act as global citizens with ethics and integrity” in our group principles, we would like to positively continue to provide relief supplies where needed in the future.

■　Previous aid activities

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UNIQLOCK has formed part of UNIQLO’s global promotion since the original blog parts were first launched in June 2007. Now UNIQLOCK has won the Best of Show in 2008 One Show Interactive, one of the world’s top three advertising awards.

The high level of originality and creativity on the UNIQLO web has been richly rewarded. UNIQLOCK has won awards in eight different sections at four different award competitions overseas, and it has also won awards in four different sections at the Tokyo Interactive Ad Awards (TIAA) in Japan.

■　The One Show Interactive Section Award

UNIQLOCK has been awarded the One Show Interactive※, one of the top three global advertising awards shows along with the Cannes International Advertising Festival and the Clio Awards.

The Best of Show was awarded for UNIQLO’s highly creative global promotion that perceives easy-to-use blog parts contents as a form of media, and uses its MUSIC×DANCE×CLOCK form of expression that anyone around the world can instantly understand regardless of language.

UNIQLO will continue its aggressive promotion activities with a global flavor, making maximum use of the WEB and incorporating various inventive methods of expression.

※  One Show is one of the three top global award shows hosted by the non-profit organization The One Club, founded in 1975 to uphold and recognize high standards of creativity in advertising. There are three awards: the One Show awarded for general advertising, the One Show Interactive awarded for new media and online advertising, and the One Show Design awarded for package design and branding. Entries are judged by top creators in each segment of the industry. The awards ceremony is held in New York in May.

■　What is UNIQLOCK

UNIQLO blog parts UNIQLOCK first appeared on our home page in June 2007 as part of our polo shirt campaign. UNIQLOCK are blog parts with an inbuilt clock function. A group of girls wearing UNIQLO clothes introduce their original dance with the screen changing in time with the clock. The overriding aim is to transmit UNIQLO’s global view to the world using our MUSIC×DANCE×CLOCK form of communication that can transcend any language barrier.

At the same time, our WORLD.UNIQLOCK has become increasingly well known in the Internet world. The WORLD.UNIQLOCK page on our website shows a world map displaying the number and location of users who incorporate UNIQLOCK parts into their own blogs.

When we launched our second cashmere version of UNIQLOCK in October 2007, we had 33,481 blog parts established in 73 countries around the world.

We launched our third version of UNIQLOCK blog parts, “20 COLOR T”, on April 28 in which we express a strange world where live pictures and animation merge.

UNIQLO is currently aggressively expanding its global operations in New York, London, Paris, Hong Kong, South Korea and China. We will continue to design promotions focusing on our key ”global” theme.

■　UNIQLOCK awards

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UNIQLO CO., LTD.
to Japanese page

As part of our CSR activities, UNIQLO CO., LTD. conducts recycling campaigns every March and September where we collect any UNIQLO product initially bought by our customers but for which they no longer have any need. This campaign is called “Thank You Recycle” as an expression of gratitude to participating customers. In this fourth campaign conducted in March 2008, we collected 910,000 items. That is more than double the 430,000 items collected in the September 2007 campaign. The number of items collected each time is increasing thanks to the cooperation and support of our customers.

UNIQLO CO., LTD. has been collecting and recycling its own used fleece products since September 2001. And we have gradually expanded the scope of these activities to now include the full UNIQLO product range. Since September 2006, we have conducted a regular, reliable collection and recycling service during the months of March and September. The clothes that we collect from participating customers are recycled as fuel or fiber materials, or reused as relief clothing. And we are keen to pursue these meaningful activities to the very best of our ability. 

■　90% of items to be donated to refugee camps in Asia and Africa

Thanks to the cooperation of various refugee support groups and institutions (※), 90% of the clothing collected in the September campaign will be donated to refugee camps in Asia and Africa. Within the planned areas for donation, we will confirm the local situation with the help of the UNHCR and then prioritize distribution to the areas of most urgent need. We hope to deliver the goodwill of our customers directly along with their clothes.

(※) International organizations and NGOs giving their full cooperation to the refugee camp donations
・ United Nations High Commissioner for Refugees（UNHCR）
・ Japan Relief Clothing Center (JRCC)

■　Reference

・For details of our All-Product Recycling Initiative:　http://www.fastretailing.com/eng/csr/environment/recycle.html

・For our All-Product Recycling Initiative photo report on donations to refugee camps: http://www.uniqlo.jp/special/csr/　(Japanese only)

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FAST RETAILING CO., LTD.
to Japanese page

FAST RETAILING CO., LTD. opens its first commercial complex in Western Japan, Mina Kyoto, on Friday, April 25, 2008. The Mina Kyoto faces onto Kyoto’s main Kawaramachi Street, and is built on the site of the former Kyoto Takarazuka Theater, much loved by the residents of Kyoto for 70 odd years.
The UNIQLO Mina Kyoto Store opens on the same day, the largest UNIQLO store in Kyoto Prefecture.

■　Style Conscious - products, ideas and occasions for the woman of sensibility

・　FAST RETAILING CO., LTD. (Sayama 717-1, Yamaguchi City, Yamaguchi Prefecture, President: Tadashi Yanai) will open an urban commercial complex on Kawaramachi Street, Kyoto City on Friday April 25, 2008. Mina Kyoto is the first such FAST RETAILING facility to be located in the Kansai region of Western Japan. It is the third facility of its kind in Japan after the Mina Tenjin facility opened in Fukuoka City, Kyushu on October 29, 2005, and the Mina Tsudanama opened in Narashino City, Chiba Prefecture on November 9, 2007.

・　The facility’s name Mina means a mountain of jewels in Spanish. We have a total 48 tenant stores. We have gathered together an array of Style Conscious products, ideas and occasions to attract our core target customers - women of sensibility between the age of 25 and 30.

■　The biggest UNIQLO store in Kyoto Prefecture!

・　We will also be opening the UNIQLO Mina Kyoto Store, the biggest UNIQLO large store in Kyoto Prefecture. At last, we are opening a large store in Kyoto’s city center, with all of UNIQLO’s best ranges and 500 different items to choose from. You can always count on UNIQLO for those vital items to suit each season.

・　Mina Kyoto, the first FAST RETAILING commercial complex in Western Japan. We will do everything to enrich and enliven the surrounding area in central Kyoto and win the appreciation of our customers and local residents.

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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
 

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The rough details of the opening of our UNIQLO Paris global flagship store have been decided. The store will be located on rue Scribe, close to the central Opera area in Paris. The store is expected to open in Autumn 2009.

Following the opening of our Soho New York flagship store in November 2006, and then our 311 Oxford Street store in November 2007, we are now set to open our third global flagship store in Paris in Autumn 2009.

■　UNIQLO to open a global flagship store on rue Scribe, central Paris

Our first UNIQLO store in France, opened in the Le Quatre Temps shopping mall in the Parisian suburb of La Defense last December, has been well supported by a great number of customers. Through this store, and our Galeries Lafayette stores opening for a limited period from April 14, UNIQLO is looking to send a message to highly fashion-conscious Parisians, and to boost UNIQLO brand visibility. The valuable experience gained in these stores in terms of marketing and store operation expertise should help us generate the very best UNIQLO for the French market, and also ensure the success of our Paris global flagship store to be opened in Autumn 2009. 

Our third global flagship store, the Paris Global Flagship Store (temporary name) will be the biggest in Europe boasting a shop floor of approximately 2150sqm. We expect the global flagship store to express the very latest and very best of UNIQLO in the city of fashion that is Paris.

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UNIQLO is to set up short-term shop in one of Europe’s biggest and most prestigious department stores, Galeries Lafayette in Paris. Two small outlets will be open for a limited period of roughly one month from Monday April 14 through Saturday May 17, 2008, one on the  1stfloor and one in the basement. After the opening of our first French store in La Defense last December, these will be the first UNIQLO concept shops right in the heart of the French capital.

■UNIQLO sets up short-term shop in Galeries Lafayette

UNIQLO is to set up shop in one of Europe’s biggest department stores Galeries Lafayette. The outlets will be open for a limited period and, as with our concept shop in La Defense opened last December, we will be looking to boost brand visibility and send a message from UNIQLO to highly fashion conscious Parisians.

There will be two UNIQLO outlets on the 1st floor and in the basement. Garment displays will include our “manga” T-shirt range, one of best-known Japanese words around the world these days, and denim items. We will also offer our “Traditional Corporation series” T-shirts with traditional Japanese prints designed in collaboration with traditional Japanese firms, and T-shirts depicting the “kojien” or definitive Japanese dictionary. The novel store design incorporates genuine comic strips. The interior will display an abundant “manga” theme from March 20, a fresh version of our T-shirt flagship UT STORE HARAJUKU in Japan. The bold store design uses the UNIQLO brand color red along with some impressive manga pages. Add to this, the rows of unique UT bottle packaging, and the stores are bound to grab people’s attention within the Galeries Lafayette store.

These T-shirts are also on sale in our La Defense store, our first French store opened last December in Le Quatre Temps shopping mall in the Parisian suburb of La Defense.

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FAST RETAILING CO., LTD. decided at its board of directors meeting held today to consider a business merger between three of its consolidated subsidiaries G.U. CO., LTD., ONEZONE CORPORATION, and VIEWCOMPANY CO., LTD (JASDAQ: Code 3033). These three companies signed a basic agreement today, the aim of which is to start discussion to integrate business and merge management operations.

１． Overview and aim of business integration and merger

FAST RETAILING CO., LTD. has infused the operational knowledge and experience derived from its UNIQLO clothing business in an effort to boost profitability at the three subsidiary firms. However, we judged that it would be difficult to deal with the deterioration in performance at each firm individually, and we are now of the opinion that a more fundamental restructuring of operations is required.

The fundamental objective here 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. To that aim, we have decided to open discussion on the possibilities for realizing such operations with FAST RETAILING as the driving force. At the same time, we will also consider the integration of business and merger of management functions among the Group’s three subsidiaries that are currently developing footwear and low-cost casual clothing. In accordance with this decision, those three companies signed a basic agreement dated today to start discussion to integrate their businesses and merge their management functions.

We expect future business cooperation between the three companies to involve positive inter-company personnel exchange between the three firms and FR with its mainstay UNIQLO operation. Cooperation will also include the setting and holding of joint meetings, etc.

２． Management merger implementation –the timing and method

At this point in time, the exact timing and details for implementing the merger of management functions are undetermined. We will disclose these details as soon as they are decided following careful consideration by FAST RETAILING and the three subsidiary companies.

Any management merger among the three subsidiaries will be subject to the successful transformation of VIEWCOMPANY into a wholly owned subsidiary of the FAST RETAILING Group. The details of this transition are described in the document released on March 19, 2008 entitled “VIEWCOMPANY to become a wholly owned subsidiary of FAST RETAILING.”

The remuneration to be delivered to remaining shareholders when VIEWCOMPANY becomes a wholly owned FR subsidiary will not be affected by the decision to merge the three subsidiary firms. Instead, this remuneration will be calculated to equal the purchase price in the tender offer on VIEWCOMPANY joint stock carried out between January 11 and February 27, 2008.

３． Outline of the three subsidiaries

G.U. CO., LTD. began operating in October 2006 as developer of the casual wear g.u. brand. G.U. had a total of 50 stores at end August 2007 and we are working to expand the scale of operations.

ONEZONE CORPORATION boasts a nationwide network of footwear retailing stores such as the FOOT PARK chain. FAST RETAILING acquired ONEZONE CORPORATION outright in March 2005 as part of its new business drive in footwear retailing. 

VIEWCOMPANY mainly operates footwear retailing specialty stores such as the “vju:” network of women’s shoe stores. FAST RETAILING entered into business cooperation with VIEWCOMPANY when it accepted the firm’s allocation of news shares to a third party in November 2006. Following the recent tender offer mentioned above, FAST RETAILING currently holds 98.96% of VIEWCOMPANY total outstanding stock leading to the subsequent decision announced on March 19, 2008 to make VIEWCOMPANY a wholly owned subsidiary of the FAST RETAILING Group.

〔Overview of the three companies〕

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