July 20, 2006
News conference, Q&A session

Press Conference
FAST RETAILING GROUP New brand ‘g.u.’
G.U. CO., LTD. Operational strategy conference
Date:
July 20, 2006
Participants:
Mr. Tadashi Yanai
Chairman & CEO, FAST RETAILING CO., LTD.
Mr. Shuichi Nakajima
President, G.U. CO., LTD.

Mr. Shuichi Nakajima President, G.U. CO., LTD.

Introduction
Mr. Tadashi Yanai, Chairman & CEO, FAST RETAILING CO., LTD.
Thank you for coming today. I am Tadashi Yanai. I want to make our new brand, ‘g.u.’, into a new
operational mainstay for our business with sales of ¥10.0bln in the first business year and sales inexcess of ¥100bln as soon as possible. I believe that the low price range clothing market that ‘g.u.’
will target is still largely under developed in Japan, but I also believe that it is a potentially hugemarket. What we are aiming for with ‘g.u.’ is, in a phrase, “the pursuit of absolute low price +fashion”. Other developed countries already enjoy a large thriving market here. For instance, in theUS, you have Walmart, Targett, Old Navy. In the UK, you have New Look, Primark, Top Shop or thelarge supermarkets such as Tesco or Asda. And, in mainland Europe, you have companies such as
H&M that are shaping the low price clothing market. I am convinced that there is a large market
potential in Japan as well, and I feel that we can definitely achieve growth over a short period. I
hope that you can share in this enthusiasm.

Question and answer session（Some of the content has been edited or revised for the sake of clarity.）

Q1: You have said that the ‘g.u.’ will aim to realise a minimum lead time between clothing design,
manufacture and sale in the stores, but just how long do you mean by this? And how does thiscompare with the lead time at UNIQLO?
A１： Shuichi Nakajima
The lead time is completely different depending on the product so it is hard to give a clear answer
here. And, since the volumes manufactured will be completely different at ‘g.u.’. and UNIQLO, it isimpossible to compare, so I will refrain from answering.

Q2: Taking bottoms for example then, what would be the production lead time there?
A2: Shuichi Nakajima
Even within the bottoms category, this differs for jeans, skirts, etc. We would just like to say that
we will ensure manufacturing lead times will be conducted with the greatest possible speed. But
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since we are just getting underway, it will be sometime before I can give you concrete details interms of the number of days for each product.

Q3: You have said that you have a sales target of ¥10.0bln for the year to August 2007, but can you
tell us your profit target for that same period?
A3: Shuichi NakajimaI can’t give you details of our profit targets at this stage.

Q4: I think we understand well the difference on price between ‘g.u.’ and UNIQLO, but could you tell
us more about how you view the differences on customer targeting and product quality?
A4: Shuichi Nakajima
We believe that UNIQLO and ‘g.u.’ can exist side by side as completely different entities.
UNIQLO seeks the ultimate quality, while ‘g.u.’ will seeks to offer fashion at the lowest possible
price. In addition, there are also differences in a variety of other areas over and above price. First,for ‘g.u.’ our customer target range is between the ages of 20 and around 35, and the target isclearly incorporated in our product development process. Of course, by splitting our product range
into a series of themes, we can also seek to broaden our customer target range. But, by clearly
differentiating our products, our store image and our product development, we will be developingthe ‘g.u.’. brand with clear and obvious differences to UNIQLO.

Q5: Is it correct to assume that you shall be developing products of similar quality to UNIQLO?
A5: Shuichi Nakajima
UNIQLO now deals with many extremely high value added products such as cashmere sweaters
and air tech jackets. At ‘g.u.’, we shall be looking rather to create fashion items out of extremely
versatile but regular fabrics, than to use high value added fabrics.

Q6: Since both ‘g.u.’ and UNIQLO will be players in the same commercial area, you could imagine
cases where the two brands might conflict with each other. Do you think there could be somecompetition with UNIQLO or are the target areas so different as to make this unlikely?
A6: Shuichi Nakajima
Since UNIQLO has around 700 stores nationwide at present, of course we are going to overlap interms of commercial areas. However, we feel that the ‘g.u.’ and UNIQLO brands have started fromsuch different perspectives with such different aims, that we are convinced they can co-exist
successfully.

Q7: What made you choose Daiei Minami Gyotoku store as the location for your first ‘g.u.’ brandstore? And does the decision to develop ‘g.u.’ first in the eastern Japan Kanto region have anything
to do with the refurbishment and reform of Daiei?
Q7: Shuichi Nakajima
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The reason why we picked a location in the Kanto region to launch the very first ‘g.u.’ brand store
was that we thought it would be better to limit the geographical area to ensure good management
and to ensure that we could keep a very close eye on things. In addition, we also want toconcentrate our new store openings for now in view of the greater cost effectiveness of advertising,
etc. When we were discussing where to locate our ‘g.u.’ stores, we were also in discussions withDaiei, and we were able to come to a decision to open our first ‘g.u.’ store in Daiei Minami Gyotoku
store.

Q8: I would like to ask Mr. Yanai a question. Can you tell me why you appointed Mr. Nakajima to run
the ‘g.u.’ brand?
A8: Tadashi Yanai
The reason why I picked Mr. Nakajima to head up this operation was based on his experience atUNIQLO. In his final role as head of product management at UNIQLO, Mr. Nakajima had overallresponsibility for the entire UNIQLO range. He has a vast experience across the board in bothstores and products. Mr. Nakajima is a member of UNIQLO’s senior management, he has
experience of everything in the firm, and he is the most reliable member of our management.

Q9: You said earlier that you would be looking to expand sales to over ¥100.0bln in the near future.
Can you tell us roughly how many years from now that will be? And, Mr. Yanai, you said that you
want to make ‘g.u.’ into a new mainstay operation for the FR group. What does that mean in termsof future profit contribution from ‘g.u.’?
A9: Shuichi Nakajima
We are hoping to reach that level of sales within 5 years.
A9: Tadashi Yanai
I think a type of operation such as ‘g.u.’ could attain a level of operating profit above 10%, maybe
in the region of 15%.

Q10: I understand that you are looking to offer a wide range of products within a short period of time,
but what kind of development method will you be using in order to develop these products withinthat timeframe?
A10: Shuichi Nakajima
In the case of UNIQLO, nearly all of the functions are conducted in house. They have TAKUMI
team (quality control at the factories), R&D centers to plan designs, and a separate production
section. By contrast, our present full-time staff at the ‘g.u.’ headquarters totals only around 30
people. Therefore, we shall be looking hard for outside partners to help support our internal productdesign. For instance, on product planning, we shall be developing this jointly with staff from within
the company and external contributors. But it will be ‘g.u.’ members that decide, in the main, themakeup of the final garment collection including design, size, etc.
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Q11: I understand that you are planning to open around half of the 25 new outlets over thisautumn/winter season within Daiei stores. What do you consider the proportion of new store
openings within Daiei stores to be from next year onwards?
A11: Shuichi Nakajima
Since we will be launching the ‘g.u.’ operation this autumn/winter, we shall be considering sales
levels post launch before deciding what new store proportions to set for the coming year.

Q12: I would like to ask Mr. Yanai, can you clarify once more for us your intention, as the FASTRETAILING group, to participate in the GMS clothing segment? I think that UNIQLO expanded its
market share in the past by luring GMS customers with quality low price goods. Can you tell us thethinking behind the introduction of yet another brand, ‘g.u.’, into this mix?
A12: Tadashi Yanai
UNIQLO is certainly well known for its low prices. However, when you compare unit prices, thecurrent reality is that there are many more brands that now offer cheaper clothing than UNIQLO.
What UNIQLO is actually valued for is its balance between quality and price. As the quality of thegarments increases, quality becomes more important to the customer than price. And, as a result,
we as a company and Japan as a country now lack a business segment that truly seeks to provide
low cost clothing on all counts. As we mentioned earlier, the companies that are growing the fastest
in the US and European markets are those that offer the very lowest prices. I think this is the same
whether you be a mass marketer or a specialty store. And I want to do the same with the ‘g.u.’
brand.

That completes this question and answer session for today.
Thank you very much for coming.

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