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FAST RETAILING CO., LTD. has decided to conduct a reorganization of group companies involving mainly its fully owned subsidiary LINK THEORY HOLDINGS CO., LTD. and LINK’s own subsidiary firms.

１．Aim of group reorganization

FAST RETAILING CO., LTD. conducted a tender offer to make LINK THEORY HOLDINGS CO., LTD. (LTH) a fully owned subsidiary in July 2009. Now, in line with our unified GLOBAL ONE management system, we plan to reorganize LINK related group operations in the US and Japan. The ultimate aim of the GLOBAL ONE system is for each group operation to be administered and managed by region in order to generate greater synergy benefits and boost management efficiency.

２．Group reorganization in the US

The FR group’s operations in the US will be reorganized as follows:

３．Business name change in the US and tentative effect date

４．Subsidiary for transfer

６．Subsidiaries to be dissolved

７．Related reorganization in Japan

In order to achieve more efficient management, we have decided to merge the three companies involved in the theory operation in Japan, LINK THEORY HOLDINGS CO., LTD. (LTH), LINK INTERNATIONAL CO., LTD. (LIC) and LINK SALES CORPORATION (LSC), with LINK INTERNATIONAL CO., LTD (LIC) as the surviving amalgamated company. To mark this merger, LIC will change its business name to LINK THEORY JAPAN CO., LTD.

８．Overview of companies for merger（at August 31, 2009)

９．Business name changes in Japan and tentative effect dates

10．Future outlook

We envisage any impact from this corporate reorganization on our consolidated performance will be minimal and therefore we have made no changes to our current business estimates.

Reference: Chart of related group companies before and after reorganization

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FAST RETAILING CO., LTD. decided at its executive board meeting held February 18, 2010, to transfer its shoe business, currently managed by fully owned subsidiary GOV RETAILING CO., LTD., to UNIQLO CO., LTD. To this aim, FR will conduct a corporate division involving GOV RETAILING CO., LTD. as the company for division and UNIQLO CO., LTD. as the acquiring company for the absorption.

１．Aim of corporate division

GOV RETAILING CO., LTD. currently manages the retail of both clothing and footwear. However, in order to begin developing the UNIQLO SHOES brand operation, we plan to retail the footwear in UNIQLO brand stores currently operated by UNIQLO CO., LTD. The company therefore decided that bringing the shoes segment under the same operational company would be beneficial for the accelerated growth of the segment.

２．Details of corporate division

（１）Corporate division schedule

（２）Division method

A division by absorption with GOV RETAILING CO., LTD. as the company for division and UNIQLO CO., LTD. as the acquiring company.

（３）Rights and obligations transferred to acquiring company

The current corporate division involves the transfer of rights and obligations related to the footwear operation as stipulated in the corporate divisional absorption contract dated February 18, 2010 between UNIQLO CO., LTD. and GOV RETAILING CO., LTD.

（４）Expected discharge of division

We judge the discharge of the responsibilities required to be undertaken by GOV RETAILING CO., LTD. and UNIQLO CO., LTD. following the current corporate division will present no specific problems.

３．Overview of companies involved in the operational transfer（at August 31, 2009）

４．Operational segments for division

The design and retail of footwear brands such as CANDISH and UNIQLO SHOES.

５．Future outlook

We expect the impact of this decision on FAST RETAILING’s corporate performance to be minimal and therefore we have made no changes to our current business estimates.<

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FAST RETAILING CO., LTD. has decided to establish a subsidiary company in Taiwan, the details of which are set out below:

１．Reason for establishing a Taiwan subsidiary

FAST RETAILING has decided to fully fund the establishment of a subsidiary in Taiwan with the aim of developing a UNIQLO operation in Taiwan.

２．Taiwan subsidiary (tentative details below)

３．Operation start date

Once the subsidiary is established, we plan to open our first store in Taipei City roughly Autumn 2010.

４．Impact on business performance

We expect any impact of this decision on FAST RETAILING’s consolidated results for the year to August 2010 to be minimal.

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Consolidated results

【Summary】　Three months to November 2009: Net sales up 39.8％, OP rises 49.1％

Both revenue and income increased significantly at FAST RETAILING during the first quarter from September to November 2009. Net sales rose 39.8% year on year to ¥263.4bln, operating income rose 49.1% year on year to ¥61.0bln, and net income increased by 57.2% to ¥34.8bln. Underlying this strong performance were considerable gains in both revenue and profit at our mainstay UNIQLO Japan operation and also expanded profits at UNIQLO International.

UNIQLO Japan same store sales increased by a strong 20.8% year on year, tipping net sales ¥20.0bln and operating income ¥10.0bln above the initial estimate for the quarter. New products including outerwear such as neo-leather jackets proved strong right from the autumn season launch. UNIQLO was often in the news with the opening of the Paris global flagship store, and the launch of the +J collection with fashion design Ms. Sander. This boosted customer numbers considerably during the quarter. Large year-on-year increases in sales of HEATTECH functional wear also contributed to the quarter’s strong revenue performance.

UNIQLO International generated a significant increase in revenue over the first quarter with the success of the Paris global flagship store opened October 1 and the launch of the +J collection helping to boost same store sales in each national market. Although GOV RETAILING performed to plan, profit at our Japan Apparel segment fell overall on the back of a downturn in performance at women’s fashion developer CABIN. Both revenue and income rose at our Global Brands segment as the newly consolidated theory brand made a strong contribution, and our COMPTOIR DES COTONNIERS brand performed to plan.

We have revised up our initial consolidated business estimates for the year to August 2010. We now predict consolidated net sales for the full year of ¥820.0bln (up 19.7% y/y), operating income of ¥130.5bln (up 20.1% y/y) and ordinary income of ¥125.5bln (up 23.9% y/y). We forecast a profit per share of 663.16 yen. We are scheduling an annual dividend per share of 200 yen that includes an interim dividend payout of 100 yen.

■　UNIQLO Japan

We achieved significant gains in both revenue and profit at our mainstay UNIQLO Japan operation which accounts for approximately 80% of consolidated net sales. Net sales for the first quarter rose 30.2% year on year to ¥204.9bln and operating income rose 42.9% to ¥56.2bln. Compared to our initial target, net sales outperformed by ¥20.0bln and operating income by ¥10.0bln. We achieved extremely strong same store sales growth of 20.8% year on year during the first quarter. New products including outerwear such as neo-leather jackets proved strong from the autumn season launch. UNIQLO was often in the news with the opening of the Paris global flagship store, the launch of the +J collection with fashion design Ms. Sander, and the grand opening of our expanded, refurbished Ginza store – all of which helped boost customer numbers during the quarter. Then, thanks to our campaign to mark FAST RETAILING’s 60th anniversary, we were even able to further extend sales in November, a month which had already seen a large increase in year-on-year sales last year. An increase in sales of HEATTECH functional wear also contributed to the strong performance at UNIQLO Japan with the number of units sold rising considerably year on year.

On the profit front, gross margin improved 1.1 points, and the SG&A to net sales ratio also improved 1.3 points year on year. The improvement in gross margin can be attributed to several factors including strong sales of new Autumn items early on in the season, strong sales of HEATTECH items, and an early launch of new seasonal goods after bringing forward the offloading of summer inventory within the previous business year to August 2009. Strong sales also generated improvement in business cost ratios.

The strong sales trend continued in December with sales of HEATTECH items and down jackets buoyant, generating same store sales growth of 11.5% year on year. However, we expect some shortages of winter stock in January, and therefore we included only the strong first quarter sales performance from September through November upon revising our full-year forcasts for UNIQLO Japan. As a result, we have revised up our prediction for net sales for the year through August 2010 to ¥615.0bln (up 14.3% y/y) and operating income to ¥130.0bln (up 17.4% y/y).

New store openings proceeded as planned in the first quarter adding a net 25 stores to bring the total number of direct-run stores to 772 at end November 2009 (792 stores including franchises). At end November 2009, we had 81 large-format stores of 1650sqm or more.

■　Japan Apparel

Overall net sales at the Japan Apparel operation during the three months from September to November 2009 rose 6.2% year on year to ¥14.4bln, while operating income shrank year on year to near zero. GOV RETAILING performed to plan, but a downturn at CABIN dragged the overall Japan Apparel segment below our initial estimate. Sales at our low-cost casual g.u. brand took off following the launch of the ¥990 Jeans series in March 2009. A continued strong trend saw g.u. sales exceed initial forecast in the first quarter generating significant gains in both revenue and income. Losses increased somewhat at our footwear operation with closing down sales at FOOTPARK stores continuing to impact. Performance at CABIN dipped below target with same store sales continuing to fall below previous year levels in a generally depressed fashion apparel industry environment.

We have revised down our forecasts for the Japan Apparel segment for the year to August 2010 owing to the continued decline in same store sales at CABIN. We now predict the Japan Apparel segment will generate net sales of ¥47.0bln (down 8.8% y/y) and an operating loss of ¥0.7bln.

■　Global Brands

Our Global Brands operation fueled a 189.4% year-on-year increase in net sales to ¥22.8bln and a 167.4% increase in operating income to ¥2.6bln. The new incorporation of theory as a consolidated subsidiary contributed greatly to this large increase in both revenue and income. Sales from the theory operation came in on plan, but the operation outperformed on profitability thanks to stronger control over inventory, and lower procurement costs as the yen strengthened. COMPTOIR DES COTONNIERS and PRINCESSE TAM.TAM performed as expected. Our full-year forecast for the Global Brands segment remains unchanged from the initial estimate of net sales ¥85.0bln (up 52.9% y/y) and operating income of ¥4.5bln (up 2.7% y/y).

■　Revisions to consolidated business forecasts for year to August 2010

Having revised upwards our full-year forecasts at UNIQLO Japan and UNIQLO International and revised down our Japan Apparel segment, we have also made some revisions to our consolidated business forecasts for the full year to August 2010. We have revised up the full-year consolidated net sales forecast from ¥798.0bln to ¥820.0bln (up 19.7% y/y), the operating income forecast from ¥120.0bln to 130.5bln (up 20.1% y/y), and the ordinary income estimate from ¥115.0bln to ¥125.5bln (23.9% y/y). Consequently, we now envisage profit per share of 663.16 yen, and we are scheduling an annual dividend per share of 200 yen including a 100-yen per share interim payment.

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FAST RETAILING believes that the reduction in stock investment units is a useful measure that will encourage the participation of individual investors and increase overall liquidity in the share market. Looking at our own share price, trading volume, number of shareholders and shareholder structure from this perspective, we believe that current conditions are sufficient to ensure necessary liquidity, and so we judge our investment units to be appropriate at this current point in time.

We shall revisit the issue of reducing investment units at timely intervals in the future based on an overall consideration of current trends in the stock market and the market indicators mentioned above.

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At its executive board meeting held on November 9, 2009, FAST RETAILING CO., LTD. decided to conduct its retained earnings dividend base date August 31, 2009 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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Consolidated results

【Summary】　FR achieves a record operating profit in Year to August 2009

FAST RETAILING CO., LTD. achieved a significant increase in both revenue and income in the year to August 2009, boosting its operating income for the year to a new record, the first time in eight years. The main reasons behind this strong performance were the significant increase in both revenue and income at our mainstay UNIQLO Japan operation, expanded profits from our UNIQLO International segment, and reduced losses at our Japan Apparel operation.

Existing store sales at UNIQLO Japan continued their strong upward trend, rising 11.3% year on year. Important factors at play here included the strengthening of our advertising and promotion activities, our popular products such as HEAT TECH, BRATOP and washable sweaters caught people’s attention and attracted more customers to our stores, and the increase of more new products for women such as skirts and jackets.

Operating income at UNIQLO International rose from ¥ 0.3bln in the year to August 2008 to ¥ 1.6bln in the year to August 2009 as losses were reduced at our UK and US operations and business expanded smoothly in the Asian region.

The operating loss at our Japan Apparel segment improved significantly on the back of improved profitability at our low-price g.u. casual brand following the launch of popular lines such as the ¥ 990 Jeans.

Profits shrank considerably at our Global Brands operation due to the worsening consumer environment in both Europe and the US. In the Global Brand segment, LINK THEORY HOLDINGS CO., LTD. was incorporated as a consolidated subsidiary from the second half.

As a result, our consolidated business results for the full year to August 2009 stood as follows: Overall net sales ¥ 685.0bln (up 16.8% y/y), operating income ¥ 108.6bln (up 24.2% y/y), and net income ¥ 49.7bln (up 14.4% y/y). We are scheduled to pay a year-end dividend of 85 yen per share. Adding this to the 75-yen interim dividend payout generates a scheduled annual dividend of 160 yen per share.

Our consolidated business estimates for the year to August 2010 are as follows: Overall net sales ¥ 798.0bln (up 16.5% y/y), operating income ¥ 120.0bln (up 10.5% y/y), net income ¥ 62.0bln (up 24.5% y/y) and a profit per share of 609.13 yen. We plan to increase the annual dividend per share by 40 yen to 200 yen per share. This breaks down into an interim dividend of 100 yen and a year-end dividend also of 100 yen.

■　UNIQLO Japan

UNIQLO Japan makes up 78% of all FR consolidated sales. UNIQLO Japan generated a significant increase in both revenue and income in the year to August 2009 with net sales increasing 16.4% year on year to ¥ 538.1bln and operating income rising 28.2% to ¥ 110.7bln. Underlying this strong performance was a range of factors: aggressive advertising activities focused on product campaigns, popular products such as HEAT TECH, BRATOP and washable knitwear caught people’s attention and attracted more customers to our stores, the increase of more new products for women such as skirts and jackets, and the fact that we were able to minimize lost sales opportunities by increasing in-store inventory of core basic products such as T-shirts and polo shirts.

New store openings proceeded to plan generating a net increase of 10 stores over the year bringing the total number of direct-run stores to 750 by the end of August 2009 (770 including franchises). Our more aggressive approach to the opening of large-format stores boosted the number of such stores to 71 by the end of August 2009.

We were able to improve our gross profit to net sales ratio by 0.9 points in the first half through February 2009. However, a 1.8 point fall in the margin in the second half through August meant that our gross margin for the business year as a whole fell 0.4 points. Our gross profit margin in the second half was influenced by the increased number of campaign products as the focus of more advertising campaigns. Moreover, we began discounting summer items earlier than usual in order to sell out the summer inventories to the fourth quarter period June through August 2009. Our SG&A cost ratio for the full business year improved as strong sales boosted efficiency across the board for personnel, advertising and promotion and store rents.

For the full year to August 2010, our business estimates for UNIQLO Japan are for a 10.6% increase in overall net sales to ¥ 595.0bln, and an 8.3% increase in operating income to ¥ 120.0bln. The launch of our autumn/winter ranges proceeded well boosting existing store sales in September by 31.6% year on year. Given this strong performance, we have factored in a 3.0% increase in existing store sales for the full year to August 2010. Our new store opening strategy for the coming business year will continue along the same lines with the planned opening of 25 large-format stores over the year. We are planning to positively focus on opening new large-format stores in prime urban areas as illustrated by the opening of our bigger, better Ginza store (2300sqm) and a new large-format store in Sakae, Nagoya this autumn and the planned opening of the Shibuya Prime (temporary name) and a large-format store in Osaka’s Shinsaibashi in autumn 2010.

On product development, we will continue to perfect UNIQLO products by pressing ahead with the development of new women’s products and more unique products with high functionality and high value-added to follow our HEATTECH range. One example of such efforts was the launch in October of our +J Collection created along Ms. Jil Sander.

■　UNIQLO International

Our UNIQLO International operation boosted profits considerably in the year to August 2009 with overall net sales rising 28.8% year on year to ¥ 37.7bln and operating income well surpassing last year’s level of ¥ 0.3bln to reach ¥ 1.6bln. Profitability improved at UNIQLO UK with sales favorable at our Oxford Street global flagship store and other existing stores there. UNIQLO USA was able to generate an operating profit thanks to strong sales at our New York global flagship store. Business expanded favorably in China, Hong Kong and South Korea with the number of stores in that region approximately double that of the previous year. Sales outstripped our initial estimate at our first Singapore store opened in April.

For the coming year to August 2010, we are forecasting a major increase in both revenue and income at UNIQLO International. We estimate net sales will increase 72.0% year on year to ¥ 65.0bln and operating income will nearly treble year on year to ¥ 4.5bln. We view our expansion in China, Hong Kong, South Korea and Singapore as the engine for growth at UNIQLO International, and therefore, we plan to increase the number of stores in the Asian region considerably from the current 76 stores to 132 by the end of August 2010. We plan to open our largest global flagship store yet in Shanghai, China in spring 2010. And next spring, we also plan to open our first store in a new market – Moscow, Russia.

■　Japan Apparel

Overall net sales at our Japan Apparel operation held flat at ¥ 51.5bln over the year to August 2009. But the operating loss improved considerably from ¥ 2.8bln to ¥ 0.5bln. GOV RETAILING posted an operating profit as profitability improved at g.u. after the launch of its ¥ 990 Jeans in March nudged overall sales onto a strong upward trend. CABIN generated an operating loss as the depressed consumer sentiment in the fashion apparel industry knocked existing store sales below the previous year’s level.

Over the year to August 2010, we forecast profitability at the Japan Apparel segment will improve as g.u. continues to expand business and CABIN improves its own profitability. At g.u., we plan to launch more and more new low-priced products to follow the ¥ 990 Jeans and ¥ 490 T-shirts. We are also planning to open 50 new stores. As for our footwear operation, we will continue with the closure of FOOTPARK stores, while on the other hand building up our new footwear business. We launched UNIQLO SHOES in September. We plan to continue our efforts to boost profitability at CABIN through efficiency gains from focusing on mainstay brands, and consolidating its procurement of materials.

■　Global Brands

Profits shrank considerably at our Global Brands operation over the year to August 2009 as sales at our French brands COMPTOIR DES COTONNIERS and PRINCESSE TAM.TAM were dampened by the worsening consumer environment in Europe. LINK THEORY HOLDINGS CO., LTD. has contributed as a consolidated subsidiary from the second half.

We are forecasting an increase in both revenue and income for Global Brands in the year to August 2010. Given that we expect the consumer downturn to continue in Europe and the US, we aim to make gains through improved management efficiency at the Global Brands operation, and from the consolidated contribution generated by LTH. We plan to increase operational efficiency at our Global Brands operation by generating additional group synergies through the strengthening of links between Tokyo, New York and Paris.

■　Estimates for Year to August 2010

Our consolidated business estimates for the year to August 2010 are as follows: Overall net sales ¥ 798.0bln (up 16.5% y/y), operating income ¥ 120.0bln (up 10.5% y/y), net income ¥ 62.0bln (up 24.5% y/y) or a profit per share of 609.13 yen. We plan to increase the annual dividend per share by 40 yen to 200 yen per share – split as 100 yen for both the interim and year-end dividends.

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Please see below the current list of entrusted operating officers for the FAST RETAILING group as of October 1, 2009.

Entrusted operating officer appointments across the FAST RETAILING group
(as of October 1, 2009)

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

■　【Board of Directors and Statutory Auditors of FAST RETAILING CO., LTD.】
(as of October 1, 2009)

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.
Note2:
In addition to the directors mentioned above, Mr. Shintaku is also scheduled to be elected as an external director at the general shareholders' meeting scheduled for November 26, 2009.

■　【Board of Directors and Statutory Auditors of UNIQLO CO., LTD.】(as of Octoberl 1, 2009)

Note:
Mr. Yasumoto and Mr. Shimizu have been appointed external auditors as stipulated under Article 2, Section 16 of the Japanese corporate law.

■　【Affiliated Company】(as of October 1, 2009)

Note:
Creations Nelson S.A.S. and PETIT VEHICULE S.A.S. are subsidiary companies of FR France S.A.S. Link International Co., Ltd. and Link Theory Holdings(US) Inc. are subsidiary companies of Link Theory Holdings Co., Ltd.

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We would like to stress that the article that appeared in the Nihon Keizai Shimbun(The Nikkei) on September 4, 2009 regarding FAST RETAILING’s estimates for the business years ending August 2009 and 2010 did not generate from any announcement made by the company.

We are scheduled to announce our business results for the year to end August 2009 and our estimates for the business year to end August 2010 on October 8, 2009.

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FAST RETAILING CO., LTD. has decided to establish a subsidiary company in China, the details of which are set out below:

１．Purpose of establishing subsidiary company

The expansion of our store network in China is an important business issue at FAST RETAILING. We are currently aggressively opening new stores in that nation and have now decided to open a global flagship store in Shanghai, China. Given these developments, we have decided to establish a new subsidiary company as administrator of the Chinese store network.

２．Outline of established subsidiary（All the following details are tentative at this stage)

３．Impact on FR business performance

We estimate the impact of the establishment of this subsidiary on FR parent-only business performance for the year through August 2010 will be minimal.

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After announcing our intention on May 21, 2009, FAST RETAILING CO., LTD. absorbed two fully owned subsidiaries, GLOBAL RETAILING CO., LTD. and GLOBAL INVESTMENTS CO., LTD. on July 1 according to the simple merger procedure.

The requirement under Corporate Law 797 Item 1 to redeem FAST RETAILING stock held by shareholders opposed to the merger has led us to purchase some treasury stock today as detailed below:

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Consolidated results

【Summary】　FR operating income up 28.3% over the 9 months to May 2009

FAST RETAILING recorded a significant increase in both revenue and income over the nine months to May 2009 with net sales rising 17.2% year on year to ¥ 537.0bln and operating income rising 28.3% year on year to ¥ 97.1bln.

Our mainstay UNIQLO Japan operation exceeded our plan in the three months to May 2009 achieving a strong 15.4% rise in same store sales over the period. A strong sales performance at our Shinjuku West Exit Store also contributed to the operation’s significant rise in both revenue and income. We achieved a profit at our UNIQLO International operation as sales expanded favorably in the Asian region including Mainland China and South Korea, and losses at our UK operation shrank considerably. Sales at our first store opened recently in Singapore have proved very successful outstripping all expectations.

Profitability improved at our Japan Apparel segment with g.u. sales expanding significantly on the back of the launch of our ¥ 990 jeans series. At the same time however, we have decided to vastly reduce our FOOTPARK footwear retailing operation, closing approximately 200 stores to leave 10 stores by the end of January 2010. In view of these store closures, we have accounted a special loss of approximately ¥ 2.5bln in the third quarter to May. We are in the process of building our new footwear business going forward as the FAST RETAILING group including our existing VIEW footwear operation. We have revised up our business forecasts for the Japan Apparel segment for the full business year to reflect the recent strength in our low-cost g.u. brand. We are expecting the segment’s loss to be significantly reduced compared to the previous year.

At our Global brands operation, business at our French-based subsidiaries COMPTOIR DES COTONNIERS and PRINCESSE TAM.TAM proceeding according to plan. Our former equity method affiliate LINK THEORY HOLDINGS was fully consolidated from this third quarter.

We have revised up our consolidated business forecasts for the full year to end August 2009 with net sales now seen rising 16.3% year on year to ¥ 682.0bln, operating income now seen increasing by 23.4% year on year to ¥ 108.0bln, net income seen up 19.5% at ¥ 52.0bln and our profit per share rising to 510.55 yen.
We have also increased our estimated 75 yen year-end dividend by 10 yen to 85 yen. Adding this to the 75 yen per share interim dividend payout generates an annual estimated dividend per share of 160 yen.

■　UNIQLO Japan

Our mainstay UNIQLO Japan operation, which constitutes approximately 80% of total consolidated sales, outstripped its targets in the three months from March to May to achieve significant increases in both revenue and income. Same stores sales leapt 15.4% year on year, and sales from new stores such as our Shinjuku West Exit store contributed considerably to the 22.8% year-on-year increase in overall UNIQLO Japan net sales. Our store opening and closure plans proceeded as expected generating a total number of 757 direct-run stores (777 including franchises) at the end of May 2009. That is a net increase of 16 stores.

UNIQLO Japan saw the number of customers to its stores leap in the third quarter through May with two extra advertising campaigns during the quarter. The successive campaign program featured our PARKA, Polo Shirts, BRATOP and UT (Print T-Shirt) products. We were also able to minimize potential lost sales by increasing store inventory of core basic items such as our fraise stitch T-shirts and polo shirts. We successfully boosted sales of our popular BRATOP products by trebling last year’s production levels and maintaining solid in-store inventory. At the same time, we have continued to strengthen our women’s wear ranges. The launch of our soft tailored jacket at the Tokyo Girls Collection in March captured a great deal of attention, and other fashion items such as our blouses, tunics and skirts have also sold well.

Our gross margin in the three months to May 2009 fell 1.5 points year on year; the quarter’s gross margin level was on plan, however. While keeping discounting under control, we strengthened our sales promotion activities in a tough consumer environment. The fall in gross profit was due to the increased number of limited sales of popular core products, and also the wider range of products incorporated within the limited sales framework given the larger number of advertising campaigns during the quarter. The SG&A ratio improved 2.7 points year on year. Efficiency across all areas from personnel costs, advertising & promotion costs to store rents improved thanks to the segment’s strong sales performance.

In light of the upturn in performance during the third quarter from March to May and the continued strength in sales through June, we have revised up our full-year estimates for UNIQLO Japan through August 2009 as follows: The forecast for net sales has been increased by a further ¥ 17.0bln compared to the most recent revision announced on April 9. The net sales forecast now sits up 16.4% year on year at ¥ 538.0bln. The April estimate for operating income has been revised up a further ¥ 7.0bln to ¥ 112.0bln, a year-on-year increase of 29.6%.

■　UNIQLO International

We were able to expand operating profit at UNIQLO International in the three months from March to May 2009 to ¥ 0.2bln (compared to ¥ 0.0bln in the previous year). This was due in part to a favorable expansion in sales in the Asian region including China and South Korea, and also to a significant reduction in losses at our UK operation. Sales at our first Singapore store, opened in April, have outstripped our plan. And this success has encouraged us to begin considering advances into neighboring South East Asian nations such as Thailand, Indonesia, Malaysia, Philippines and also India, Vietnam and Australia. Our full-year forecasts for UNIQLO International remain unchanged with net sales expected to rise 26.1% year on year to ¥ 37.0bln, and operating income seen creeping up from the previous year’s level of ¥ 0.3bln to a more solid ¥ 1.5bln.

■　Japan Apparel

We were able to reduce losses at our Japan Apparel segment in the third quarter to May 2009 thanks to improved profitability at our g.u. apparel brand. Profitability has been improving at g.u. with sales expanding significantly since the launch of our ¥ 990 jeans in March. And now it is not just our jeans that are keeping g.u. sales so buoyant but also our ¥ 990 polo shirts, our ¥ 490 T-shirts and a successive line of new low-priced products. Although our footwear operation (FOOTPARK & VIEW) continues to underperform, third quarter performance for GOV RETAILING as a whole was in line with expectations. Existing store sales at women’s fashion retailer CABIN continue to fall year on year but this was also in line with the plan.

Regarding our FOOTPARK footwear operation, we have decided to make a sweeping reduction in the number of stores, closing approximately 200 stores to leave about 10 stores by the end of January 2010. We have accounted a special loss of ¥ 2.5bln in the third quarter to May in relation to these store closures. However, we do not expect to generate another material store-closure related loss in the coming business year through August 2010. As the FAST RETAILING group, we are currently in the process of building our new footwear operation including VIEW should take.

We have revised our full business year estimates for the Japan Apparel segment to reflect the strong performance by g.u. Net sales have been revised up a further ¥ 3.0bln from to the April estimate to ¥ 51.0bln (+3.1% year on year). The segment’s operating loss is now seen improving a further ¥ 0.5bln compared to the most recent forecast. That would equate to an operating loss of¥ 1.5bln for the year to end August 2009 compared to an operating loss of ¥ 2.8bln last year.

■　Global Brands

Business performance at our Global Brands operation proceeded as planned in the three months to May 2009. LINK THEORY HOLDINGS became a consolidated subsidiary from this third quarter. Our French-based COMPTOIR DES COTONNIERS and PRINCESSE TAM.TAM operations saw revenue drop 20% and income drop 80% in yen terms. However, we had expected and prepared for this drop. Full business year forecasts for our Global Brands segment reflect revisions to performance at LINK, etc. We now expect the operation to generate a 21.1% year-on-year increase in net sales to ¥ 53.0bln,　while we foresee a 66.5% fall in operating income to ¥ 2.6bln.

■　Consolidated estimates for the business year to end August 2009

We have made further upward revisions to our recent estimates for consolidated business performance over the year to August 2009. We now see net sales increasing 16.3% year on year to ¥ 682.0bln, and operating income rising 23.4% year on year to ¥ 108.0bln. In addition, we expect ordinary income to rise 17.9% year on year to ¥ 101.0bln and net income to rise 19.5% year on year to ¥ 52.0bln. We are now predicting profit per share to reach 510.55 yen.
We have also increased our estimated 75 yen year-end dividend by 10 yen to 85 yen. Adding this to the 75 yen per share interim dividend payout generates an annual estimated dividend per share of 160 yen.

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At the board meeting of directors held July 9, 2009, FAST RETAILING CO., LTD. decided to revise its dividend per share estimate for the full year ending August 31, 2009. The decision is detailed below.

1. Reason for the dividend forecast revision

Based on the consolidated estimate for the full year to August 31, 2009 , and a long-standing policy that dividend payments should reflect business performance, FAST RETAILING has revised its business year-end dividend per share estimate from 75 yen to 85 yen. Consequently, the estimate for the annual dividend per share is being revised from 150.00 yen to 160.00 yen.

2. Dividend revision

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At its executive board meeting held on May 21, 2009, FAST RETAILING CO., LTD. determined to absorb by amalgamation two fully owned subsidiaries GLOBAL RETAILING CO., LTD. and GLOBAL INVESTMENT CO., LTD. The details of the said decision are laid out below.
Please note that, given that the objects of the absorption are both fully owned subsidiaries of FAST RETAILING CO., LTD., some of the content and details for disclosure have been abbreviated.

1.  Aim of the consolidation

GLOBAL RETAILING CO., LTD. and GLOBAL INVESTMENT CO., LTD. are both fully owned subsidiaries of FAST RETAILING CO. LTD. involved mainly in the sale of clothing goods through shareholdings in affiliated companies.
FAST RETAILING CO., LTD. has decided to amalgamate GLOBAL RETAILING CO., LTD. and GLOBAL INVESTMENT CO., LTD. by absorption with the aim of boosting the management and administrative efficiency of the FAST RETAILING group.

2.  Details of the consolidation

3.  Details of companies involved in the consolidation（As of end august 2008)

4.  Situation after consolidation

5.  Future outlook

The impact of the said consolidation on FAST RETAILING business performance is expected to be minimal and consequently no changes will be made to our currently published business estimates.

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