Last Updated: 2010.12.20
to Japanese page
Management regards the following to be the principal risk factors associated with the operations of Fast Retailing and other members of the Group that could have a material impact on the decisions of investors. Management engages in rigorous risk avoidance and risk management in recognition of the possibility of these risks and strives to respond appropriately should any of these risks arise.
(1) Specific risks associated with the implementation of corporate strategy
(a) Corporate acquisition risk
The Group engages in M&A activities as one of its management strategies for the expansion of its operations. Through these activities, the Group seeks to maximize its corporate value by optimizing its business portfolio through synergies with companies and operations targeted through M&A activities. However, in cases where the Group is unable to realize the expected profit and benefits of M&A activities, this could have an adverse impact on its business results.
(b) Management personnel risk
Members of the Group's management team, led by Chairman, President & CEO Tadashi Yanai, have a major role to play in their respective areas of responsibility. In the event that any member of management becomes unable to fulfill his/her duties, this could have an adverse impact on business results.
(c) Competitive risk
In each of its businesses, the Group customers are consumers who are always highly discriminating about merchandise, services and prices, and the Group engages in tough competition with other companies in the same industry in Japan and overseas. In the event that the relative competitive strength of the Group deteriorates, this could have an adverse impact on business results.
(d) Risk of reliance on certain regions for production
The majority of merchandise sold through UNIQLO business operations, which are the core activities of the Group, are imports manufactured in China and other countries in Asia. For this reason, in the event that major changes occur in the political, economic and/or legal environment, or in the event of natural disasters in China or other countries where production takes place, there is a possibility that this could have an impact on the Group's ability to supply products.
(e) Risk of operations outside Japan
The Group is developing its business activities through M&A and actively expanding its operations overseas. As the Group's businesses open many stores in countries around the world, the ratio of overseas sales to the Group's net sales is expected to rise. In conjunction with this, the uncertainties related to changes in market needs and product trends, economic fluctuations, political and social turbulence, or changes in legal regulations and/or other conditions in these overseas markets could have an adverse impact on business results.
(f) Foreign currency risk
Transactions for the majority of the products imported for the UNIQLO business, which is the Group's core business, are conducted in U.S. dollars. The Group has concluded forward foreign exchange contracts to cover imports for approximately the coming three years, and, therefore, by locking in the foreign exchange rate for its imports, endeavors to stabilize its procurement costs. However, if there are major movements in exchange rates that persist for prolonged periods, this could have an adverse impact on the Group's business results.
(2) General business risks
The Group recognizes the following risks associated with the management and conduct of operations: (1) risk of product liability, (2) risk of leakage of personal information, (3) risk of weather conditions, (4) risk of disasters, (5) risk of disputes and lawsuits, and (6) risk of changes in economic conditions and consumption trends.
