Last Updated: 2008.04.24
to Japanese page
Management regards the following to be the principal risk factors associated with the business 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. Risks associated with the implementation of corporate strategy
（1） 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 pursue synergies with companies and operations that are the objects of its M&A activities and optimize its business portfolio, thereby aiming to maximize the Group's business value. 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 business results.
（2） Management personnel risk
Among members of the Group's management team, including Tadashi Yanai, Chairman, President & CEO, each has a major role to play in his/her respective areas of responsibility. In the event that any member of management becomes unable to fulfill his duties, this could have an adverse impact on business results.
（3） Competitive risk
In each of its businesses, the customers of the Group are consumers who are always highly discriminating about merchandise, services, and price, and the Group engages in tough competition with other companies in its industry in Japan and overseas. In the event that the competitive strength of the Group deteriorates, this could have an adverse impact on business results.
（4）Risk of reliance on certain regions for production
The largest percentage of merchandise sold in UNIQLO business operations, which are the core activity of the Group, is manufactured in China and other countries in Asia and then imported into Japan. For this reason, in the event that major changes occur in the political, economic, and/or legal environment, or natural disasters are experienced in China and other producing countries, this could have an adverse impact on business results.
（5） Risk of UNIQLO operations outside Japan
The Group is developing its business activities through M&A and actively expanding its UNIQLO operations overseas (in the United Kingdom, mainland China, including Hong Kong, the United States, Korea, and France). At present, the overseas operations of UNIQLO account for only a relatively small percentage of consolidated net sales, but, going forward, the Group will establish additional flagship stores in countries overseas and increase the number of other stores as well as set up UNIQLO operations in additional countries. Accordingly, the ratio of UNIQLO's overseas sales to its net sales is believed likely to rise. Along with this trend, if the Group is unable to deal with the uncertainties of changes in market needs and product trends in these overseas markets or if economic fluctuations occur, political and economic conditions become turbulent, or changes occur in legal regulations and/or other conditions, these could have an adverse impact on business results.
（6） Foreign currency risk
The majority of product imports of the UNIQLO business, which is the Group's core business, are denominated in U.S. dollars. The Group has concluded forward foreign exchange contracts to cover imports for 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 is a major trend toward a weaker yen and a stronger U.S. dollar and this trend persists for a prolonged period, this could have an adverse impact on 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.