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FAST RETAILING's
New Business Strategy

Tadashi Yanai
FAST RETAILING CO., LTD.
Chairman & CEO
FAST RETAILINGCO.,LTD.

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The FAST RETAILING vision
zDevelop a truly revolutionary casual clothes thatappeal to people the world over for anywhere
and any time.
zCreate a truly revolutionary global company tobecome the world’s number one casual wear group.
zAchieve net sales of 1 trillion yen andordinary income of 150 billion yen by 2010.

FAST RETAILING
CO.,LTD.

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Revolutionizing the FR group structure
Major changes
z Rejuvenate our spirit as a group of venturecompanies with global aspirationsz Expand our presence in both retail industry
and location, perfect our products, improve
our corporate organizationz Shift to a holding company structure &maximize our M&A strategy
z Genuine & enthusiastic push into non-Japan
markets
FAST RETAILING
CO.,LTD.

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Revolutionizing the FR group structure
Go venture!
From a large
corporation to arevolutionary groupof high-margin, highgrowth companies

Go global!
Across the board –markets, products,operations,personnel,management

Go group!
Boost value of overall
group by seeking
synergies with our core
UNIQLO brand andseeking new growth
opportunities within theretail industry
FAST RETAILINGCO.,LTD.

25Where we want to be on FR group netsales by 2010 and how to get there
An example of possible numerical stages towards ultimate goalof 1 trillion yen sales by 2010

(billions of yen)
2006
UNIQLO - Japan

2007

2008

2009

2010

Operating Income

380

450

500

550600100

UNIQLO - non-Japan

5103050100

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theory 、ONEZONE, National Standard, Aspesi, etc.

4050556580

10COMPTOIR DES COTONNIERS

152530354010New business pillar 150608090100

10New business pillar 2-607090100

10New business pillar 3
FR Group (total)

--80

90100

10490

655

845

970

1,120160※This should be viewed purely as a hypothetical example of the possible
numerical stages towards our ultimate goal. Concrete business forecasts areissued along with the announcement of our business results.
FAST RETAILING
CO.,LTD.

6UNIQLO potential within Japan
Where we want to get to with the UNIQLO brand in Japan
Sales floor area
Large-scale stores
Regular stores
Small scale storesapprox 660 tsubo(approx 1980 sq m)

approx 220 tsubo(approx 660 sq m)

approx 50 tsubo(approx 165 sq m)

StoreAnnual net sales Total Sales
numbers
200 stores￥1.8bln￥360.0bln

1000 stores￥0.5bln￥500.0bln

1000 stores￥0.15bln￥150.0bln

Total domestic sales ≒ ¥1 trillion
FAST RETAILING
CO.,LTD.

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UNIQLO growth engines① Expand business type and location② Product development③ Corporate organization

FAST RETAILING
CO.,LTD.

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UNIQLO Growth engine① Expand business type and location
Strategic shift on business type & location
Old strategy: create multiple store network based on set format
New strategy: determine optimum store conditions prior toopening in terms of location, floor space, customer type, etc.

Ensure UNIQLO is for anyone, anywhere, anytime■Focus: large-scale suburban stores (1,650 – 3,300 sq m)■Focus: small scale city center stores (30 – 330 sq m)
FAST RETAILING
CO.,LTD.

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9Potential for UNIQLO domestic annual sales
There is still untapped potential for domestic UNIQLO
sales totaling a maximum ¥96.0bln per year
Sales floor area

Large-scale approx 660 tsubo(approx 1980 sq m)storesRegularstoresapprox 220 tsubo

Small scale
storesapprox 50 tsubo(approx 660 sq m)(approx 165 sq m)

Monthly sales
per tsubo(3.3 sq m)

Annualnet sales

New storesper year

Increase inannual net sales¥250,000 ￥150mln ￥1.8bln

20 stores￥36.0bln¥250,000￥50mln ￥0.6bln

50 stores￥30.0bln¥500,000￥25mln ￥0.3bln 100 stores￥30.0bln

Monthly
net sales

Total￥96.0bln※1 These annual net sales numbers are different from those in slide 8※2 In calculating the latent market potential for increased annual net sales,
we have not incorporated store closures through scrap and build or
reduced income at existing stores resulting from the new store competition.
FAST RETAILING
CO.,LTD.

10UNIQLO growth engine② Product development
zOptimize product development
by employing the right staff
around the world to generate
the best global mix in termsof quality, quantity, etc.
zDevelop a UNIQLO product structurethat best suits a particular location,
floor space and customer base.
FAST RETAILING
CO.,LTD.

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11Develop products on a global scale■Establish an R&D headquarters, employ the right staff aroundthe world to generate the best global mix in terms of quality,quantity, etc.
■Establish R&D branch offices in various parts of the world toensure product development that is both global but at the sametime best suits local needs.
TokyoNew York
Paris
Milan
ShanghaiLondonHong Kong

FAST RETAILINGCO.,LTD.

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Product development structure
Our ultimate aim is to develop products that suit ahigh efficiency retail structure with shop floors up
to 3,300 square meters.
Introduce a division system①Clearly define each collection②Foster divisional responsibility③Allow individual division stores

Men’s division
Women’s division
Kids’ division
Goods division
Inner/underwear division

Segment and thereby strengthen
product development teams

MenWomen
Kids
Inner/Underwear
Goods
SportsJeansHome

2 teams
3 teams
2 teams
2 teams
2 teams
1 team
1 team
1 teamFAST RETAILING
CO.,LTD.

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Create additional value
UNIQLO’s past hit garments
cashmere and dry clothing.

have

been

fleece,Why?
Not only did these products satisfy the simple basic
mass trend in the market, but they also uncovered alatent customer need, thus generating fresh, recurrent
demand.

Develop products/campaigns that can boast
10 million items soldFAST RETAILINGCO.,LTD.

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The global all-inclusive casual retailers (SPAs)
First generation SPAs： GAP、LIMITED （late 80s, early 90s)
Development of specific casual garments, jeans.
Mainly basic garments with some seasonal themes

Second generation SPAs: ZARA、H&M （Late 90s onwards)
zSuggest latest fashion, themes, looks⇒ Information value over and above product value
zVery high margin clothes, momentary surges in saleszWomen’s wear; set themes monthly, sell out monthly⇒ shift from theme of the season to theme of the month(SPA is a retailer involved in the whole process of clothes
creation from design through manufacture, distribution & sale.)
FAST RETAILINGCO.,LTD.

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Creating a third generation SPA①zRedefine and redesign our entire business and productstructure to create the world’s number one SPA−Aim to become both the world’s number one global SPA andalso the best selling regional or local SPA.
−Ensure that anyone wherever they are in the world can buy world class,high quality products in their own local area
−Add a tinge of fashion to daily necessities−Ensure world class, absolute quality

zRealize world class products, world first saleable
concepts− Affordable High-performance
Offer high performance wear never before conceived (sportswear, etc)
− Affordable Luxury
Offer current “luxury goods” at affordable prices
FAST RETAILING
CO.,LTD.

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Creating a third generation SPA②zCollect information on what sells around the world interms of themes, concepts, mass trends, fashion,styles, fabrics, designs, products, store design. Put allof that information in a pot to create our own special
product and product development recipe and thenproduce the goods.
zBe sure to disseminate information across the world−Design everyday clothing necessities and essential
items with an up to date, unique style, quality,and hint of fashion that we can be proud of
anywhere in the world.
−Ensure a clear and full product line-up, productinformation and corporate image, then disseminate
this across the world.
FAST RETAILING
CO.,LTD.

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UNIQLO growth engine③ Corporate organization
To achieve sales of 1 trillion yen andordinary income of 150 billion yen by 2010,
we must also recreate our company.
＜Current situation at FAST RETAILING＞
We don’t have suitable or sufficient in-house management
experience to support future global growth. Neither do wehave the right system in place at present to nurture futuremanagers.
FOCUS: What corporate structure, what system do
we need to win and achieve our 2010 goals
on the heavily competitive global retail stage?
FAST RETAILING
CO.,LTD.

18The drive for higher growth
Fostering the drive for higher growth① Short span training to enable managers to branch out early② Create a corporate structure/system attractive to externalmanagement personnel③ Break the inertia at UNIQLO that comes with the sense ofsuccess④ Reform our personnel, evaluation, remuneration andcorporate governance systems⑤ Refute sense of security, inertia that often accompanies alarge company structure, renew our venture spirit⑥ Urge each and every staff member to fundamentally
review their attitude to work and become more proactive.
FAST RETAILING
CO.,LTD.

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Separate governance and management
Start from scratch across the board fromexecutive board members, operating officers,
all personnel. Give everyone a blank sheet andencourage everyone to think, act and create
like a founding member of our company.
zClarify responsibilities with executive board members
responsible for deep reaching corporate governanceand operating officers the day to day management
decision making.
zOperating officers will delegate daily management andcommit firmly to its success.
zWhen they achieve results, staff should enjoy similar
long-term incentives to founding members.
FAST RETAILINGCO.,LTD.

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The shift to a holding company structure

zAttract good business and talented managers
zRealize a fresh venture, global and group spirit
zEstablish a group company governing structure

FAST RETAILING
CO.,LTD.

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The need for talented managers and how to get them
UNIQLO’s global market share is but a mere 0.4%.
We need a variety of talented managers to help up
develop our business in the so far untapped 99.6%
remaining market.

M&A strategy key to attracting thevariety of talented managers we need.
FAST RETAILING
CO.,LTD.

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The theory lesson
What we learned from theory capital injection
zSet up in New York 8 years ago, Tokyo business begun 7 years ago
zAmalgamated US & Japan businesses, listed on Tokyo StockExchange “Mothers”
zCurrent annual business ¥35.0bln, current forecast for ordinary profit¥4.2bln, market cap ¥100bln
zFuture potential as a global brand with annual sales of over ¥100bln

You can take on the world market
with a good concept and talented managers
FAST RETAILING
CO.,LTD.

1123The importance of M&AIf we can find good business opportunities andtalented managers from around the world, we cancreate a global business, and quickly secure annual
sales of ¥100bln and ordinary profit of over 10%.

What we can gain from M&A
zTime effective route to creating an operational structure
zAttract world class global managers
zStrengthen functions where FR group traditionally weakzSpeed up the growth of acquired companies
zSpeed up corporate renewal
zCreate a platform for overseas businesses
FAST RETAILING
CO.,LTD.

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M&A target areas and scale
zFirms in the fashion industry with global
growth potential
zFirms that can achieve
future annual sales of over ¥100bln andordinary profit to sales margin of over 10%.
zFunds for investment: ¥300 – 400bln
over next 3 years

FAST RETAILINGCO.,LTD.

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Plans for COMPTOIR DES COTONNIERS brandWithin the next five years・・・

Amalgamate Japanese and French management,
aim for annual sales of ¥40bln
and ordinary profit of ¥10bln by 2010.

FAST RETAILING
CO.,LTD.

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The listing of group companies＜Aim＞
zGrowth of independently successful firms andself-fulfillment of talented management
zRealize a vibrant corporate climate andseriously committed management pool

FAST RETAILING
CO.,LTD.

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Merits for companies within FR group①Participating companies can benefit from establishedbusiness platforms and infrastructure to greatly boost
their competitiveness and growth potential.
(management experience, management personnel,
production, store management, business systems,
distribution systems, fund procurement, etc)

②Valuable synergy benefits through sharing of specificexperience across the group, swapping of personnel,
joint platforms, improved purchasing power.
FAST RETAILING
CO.,LTD.

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UNIQLO development outside of JapanzAcquisition or tie-up with companies inEurope, America and China that can provide
the platform infrastructure and personnel for
UNIQLO’s local development.
zAim to establish companies that can quickly
achieve sales of ¥10bln and ordinary profit
margin over 10% in each area.
zM&A is an important tool in achieving this aim.

FAST RETAILINGCO.,LTD.

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2005 Autumn: UNIQLO overseas development,
flagship stores and new business areas＜Overseas development＞・ US
New Jersey
3 stores・ South Korea Seoul
3 stores・ ChinaBeijing
2 storesHong Kong
1 store・ UK
Regent Street store 1 store (expansion)＜Flagship stores＞・ Ginza store＜New business areas＞
・ Speciality women’s underwear store:BODY by UNIQLO
・ Speciality kids store：UNIQLO KIDS
・ Outlet in Ikebukuro TOBU Department store:
new urban style UNIQLOFAST RETAILINGCO.,LTD.

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From UNIQLO PLUS to a new style of UNIQLOThe UNIQLO PLUS store name and concept
has run its course.
The future direction of our UNIQLO stores will not be
decided by what we can “add” to the set UNIQLO
format. Instead, UNIQLO stores themselves willdevelop a more flexible brand centered on large scaleoutlets.
Stores will be established according to a variety ofvariables from location, floor space, varied customer
needs and circumstances. Our UNIQLO stores will bethe optimum place for anyone to buy what they want,when they want to buy it.
FAST RETAILINGCO.,LTD.

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The FAST RETAILING vision
To create a revolutionary global company
providing truly fine casual clothes thatanyone can buy, anywhere, at any time.

To become the world’s number one casual
wear corporate group with sales of 1 trillion
yen and ordinary income of 150 billion yenby 2010.

FAST RETAILINGCO.,LTD.

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