My name is Pan Ning, and I am a Group Senior Executive Officer at Fast Retailing andCEO of UNIQLO Greater China.
Today, I would like to talk to you about the current situation surrounding UNIQLO Greater China and some of
our initiatives that are designed to promote the future growth of our business in this region, which serves as oneof the key pillars of overall Fast Retailing growth.

Looking first at UNIQLO Greater China performance in the third quarter of FY2024 from March to May, whenrevenue declined and profit contracted sharply on a local currency basis.
Breaking that performance down into individual markets, the Mainland China market and Hong Kong market
reported lower revenue and sharply lower profit levels, while the Taiwan market reported sharply higher
revenue and profits compared with the previous year.
I would like to focus here on the Mainland China market, where both external and internal factors played a rolein dampening local performance.
Those external factors include the fact that the period was being compared with a strong previous year, whenrevenue rose by approximately 50% year-on-year on the back of the post-COVID resumption of economicactivity, as well as decreased consumer appetite and unseasonal weather in all areas of Mainland China
caused by abnormal weather events.
Furthermore, we are also noting some changes in the market as the degree of competition between shopping
malls grows progressively severe and differences start to emerge around each mall’s ability to attract
customers.
The internal factors that adversely influenced performance in the Mainland China market include our inability tocompile sufficient product mixes to satisfy customer needs and suit differing climates in each area, insufficient
product mix and marketing activities contribute to sales performance. Furthermore, about 150 stores cannot
attract customers due to growing differences among malls then push down the overall monthly average.

While the slowdown in economic activity continues to dampen general customer appetite in the Mainland China
market, consumption tends to pick up around the time of the Single’s Day and 618 sales.
UNIQLO ranked first in apparel sales among T-malls in both the W11 in November 2023 and the 618 sales
season in June 2024. Some strong communication of product-linked information on Duoyin (Chinese TikTok)
as a new sales channel also helped fuel an increase in Duoyin sales by roughly 30% year-on-year during the618 sale. We have a keen sense of continued strong customer expectations toward the UNIQLO brand.
One noteworthy trend is the sharp uptick in e-commerce sales this year compared with the sharp growth inphysical store sales last year following the reopening of the economy after the COVID-19 pandemic subsided.
In fact, our e-commerce operation reported double-digit year-on-year sales growth in the third quarter fromMarch to May 2024. Within the e-commerce operation, the LIVE STATION streaming service, where store staff
introduce products that customers can buy directly, is proving very popular. Indeed, LIVE STATION sales
increased by approximately 50% in the third quarter to constitute over 20% of total e-commerce sales.
UNIQLO online membership has doubled in the past four years to nearly 80 million, which we see as a great
opportunity to further expand our business going forward.

Customer mindsets have changed considerably in Mainland China in the post-COVID era, and customers havebecome much more discerning when it comes to choosing products and services. Cost-performance
consumption is particularly marked among younger generations, and we are seeing a new set of consumer
values centered on “pingti” (affordable alternatives), where consumers choose a more affordable product thatdiffers very little from branded items in terms of quality.
More and more consumers are looking to improve their quality of life in terms of safety, security, and health,and there is a growing interest in and demand for products that are reliable, comfortable to wear, easy to lookafter, and can be worn as everyday wear and as sports wear.
The UNIQLO LifeWear that we provide is simple, high-quality, basic, and timeless and boasts a full lineup ofhighly functional clothing that can be used for both sports and everyday wear. UNIQLO is the brand of choicefor customers of all ages thanks to a good balance between price and value based on our MADE FOR ALL
philosophy. We are witnessing strong global support for UNIQLO’s extremely well-sewn everyday wear madefrom the highest quality materials under the guidance of the world’s top designers.
UNIQLO’s relative competitiveness is actually growing as consumer sentiment changes. We feel UNIQLO has
the potential to become the go-to brand of choice for consumers in Mainland China.

In a survey conducted in spring 2024, UNIQLO visibility in 43 major cities in Mainland China stood at 94%, andthe percentage of respondents who had bought a UNIQLO product at least once reached 84%. The UNIQLO
brand is extremely well known in the Mainland China market, and I feel it has already become a top brand inthat market. Thanks to this high level of recognition, customers share information across borders from North
America to Southeast Asia, which also helps a great deal in terms of boosting global sales.
The survey also revealed that 56% of respondents included UNIQLO as one of their top five go-to brands. I
think the reason for that figure is that, while UNIQLO LifeWear is already viewed as essential
by many
customers in the Mainland China market, half the respondents still do not select UNIQLO as a brand theywould purchase regularly.
UNIQLO’s current market share is still 2% or lower. We are convinced there is great potential to expand ourbusiness by ensuring UNIQLO is known as a brand that is deeply sensitive to and strongly invested incustomers’ everyday lives.

One of the reasons why we have not been able to sufficiently unleash this potential is because our chain store
development is maturing and reaching a turning point.
Chain store development has served us extremely well to date, fueling efficient, high-growth operations andgenerating revenue of 620.2 billion yen from 1,031 stores across the Greater China region in FY2023.
Going forward, we will continue to pursue the benefits of chain store development while also implementing
thorough local store management to overcome internal issues and put the Mainland China market back of ahigh growth trajectory.
What we want to achieve through local store management is to address the need for product mixes that are
tailored to large areas with different climates and cultures. We want to make better use of our stores, which areour best form of media, to strengthen branding that conveys LifeWear’s intrinsic value. We want to open storeswith strong community roots in the best locations and develop an indispensable community-focused presence.
Finally, we want to cultivate store managers who think for themselves, devise sales plans that accurately
capture customer demand, and create new demand.

Next, I would like to talk about the four initiatives we need to focus on to achieve local store management.

The first initiative involves changing our store opening strategy.
We are noting some increasingly obvious differences in shopping malls’ ability to attract customers. Given thisgrowing differential between malls, we are restructuring our store network with a focus on the quality rather
than quantity of stores. In future, we will only select new stores that can embody our brand value andencourage customers to shop there for a long time. While the ultimate aim is to open 80 new stores a year, I
want to make sure we open at least 50 new stores each year with this renewed focus.
Another initiative involves applying our scrap & build (S&B) policy to roughly 50 stores a year for the threeyears from FY2024. That policy will involve closing stores with low monthly sales and replacing them with largeformat stores in better locations as well as improving the position of our stores within malls that generate highmonthly sales, expanding sales floors, and refurbishing stores as part of our plan to increase sales per store byat least 1.5 times compared with current levels.
We have already implemented S&B at 22 stores since FY2023 and we improved monthly sales per store byapproximately 1.5 times through those measures.

We also intend to strengthen LifeWear branding around our flagship stores.
We will refurbish flagship stores in Shanghai, Guangzhou, and other locations to meet current customer needs
and values.
There are comparatively few flagship stores in the Mainland China market despite its huge size, so we intend toopen flagship stores with an overwhelming presence in large cities with great potential that do not already haveflagship stores, such as Chongqing, Chengdu, Tianjin, Xi’an, Kunming, Zhengzhou, and other locations. Thesestores will then communicate a continuous stream of product-related information and engage in communitybuilding activities to earn local customer support and build a stronger brand presence.
As part of this drive, we opened the new Wuhan Chuhe Hanjie Street store with its extensive 2,150㎡ shop
floor in May 2024 as a representative flagship store for the city of Wuhan. Wuhan boasts one of the world’s
largest number of university students, so we teamed up with a local university and hosted a forum on theuniversity campus in which we explained about future employment opportunities, held a student-led fashion
show, and interacted with many university students. Over 30,000 customers visited the store on opening day,which was a great success.
We tend to focus more closely on the quality of our stores as opposed to the number of stores, so ourstandards for opening new stores are extremely high. Opening 80 new stores a year is no easy feat, but I thinkthat the unique value that LifeWear has to offer also greatly benefits the shopping malls that house the UNIQLO
brand, and we are keen to work with shopping malls to invigorate local areas and communities.
Thanks to our efforts to maintain this win-win relationship, UNIQLO is fast becoming one of the brands thatmalls most want to attract.

Please take a look at this video that captures the mood on the opening day of this flagship store in Wuhan.

The second initiative we are taking to implement the shift to local store management is to further integrate ourphysical stores and e-commerce operation.
E-commerce currently accounts for approximately 25% of total sales, of which roughly 40% is online-to-offline(O2O) sales.
We can help expand overall sales for the entire business by expanding integrated services and directing
customers from physical stores to online stores, and from online stores to physical stores for a seamless andsmooth shopping experience.
UNIQLO Mainland China boasts a directly operated store network and management capabilities as well as astrong ability to attract customers through e-commerce. Centralizing physical store inventory and e-commerce
inventory to a greater extent will enable us to provide services and convey information based on the integrated
store and e-commerce operations.
Our LIVE STATION streaming featuring in-store staff is popular, and customer support for this service isincreasing in each area. We are currently training roughly 2,000 store staff to broadcast LIVE STATION
services from all our stores. In addition to our own digital tools, we also fully capitalize on WeChat, Duoyin , andother digital platforms to help achieve our aim of increasing the ratio of e-commerce sales to total sales to 30%.

I would like to show you what kind of messages we are conveying via the LIVE STATION streaming service.
Please watch this in-house training video.

The third initiative we are taking to implement the shift to local store management is to enhance product mixes
tailored to local needs.
UNIQLO has developed alongside the textile industry in the Mainland China market and has contributed to themarket through its business expansion. We have many long-term partner factories in the Mainland Chinamarket. Since it is both a production and a consumption area, it is possible to perfect “making clothes while
selling them” to a high degree. As a result, we were able to reduce inventory levels at the end of May 2024 byapprox. 10% compared to the end of May 2023 despite the slowdown in sales.
We capitalize on these strengths to divide Mainland China into regions by climate, lifestyle, culture, etc. andcreate product mixes that match the characteristics of each region, control inventory, and strengthen marketing.
For instance, in August, Summer items top the sales rankings in South China where the weather is hot, while
our Fall and Winter products feature in the best-selling product lists in North China, where the temperature isstarting to cool. This is just one example, and these kinds of differences can grow even more complex toward
the end of a season depending on the region. Therefore, we have to compile a detailed, tailored response foreach region regarding the handling of inventory and marketing.

The fourth initiative we are taking to implement the shift to local store management is to cultivate and create
management personnel.
We are implementing sweeping Zen-in Keiei management principles in which every individual adopts amanagerial mindset and makes and executes autonomous decisions.
To cultivate store managers as business professionals, we hold store manager conventions with global
headquarters, utilize in-house global training tools to teach managers about FR corporate philosophy andbusiness principles, and send management team members, including myself, to stores every week to conduct
practical on-site management training sessions for local store managers.
We hire roughly 300 talented people every year in the Mainland China market. Last year, approximately
140,000 people applied for new graduate positions, so Fast Retailing remains a popular choice in therecruitment market, and we will continue to hire and cultivate large numbers of management talentFurthermore, we work with global headquarters to produce human talent on a global scale.
The Mainland China market has dispatched a total of 118 excellent personnel to 17 markets worldwide and is
fast becoming the largest producer of human talent in the UNIQLO International business segment.
In addition to cultivating highly talented individuals from Mainland China to become globally competentmanagement team members, we enhance the pool of talented human capital across the Group bystrengthening business foundations in different market operations and by serving as role models for local
human resources.
We will also apply the various perspectives gained through our management experience to increase customer
satisfaction worldwide.

We will work hard to achieve the sales target for UNIQLO Greater China of one trillion yen in FY2028.
This is still a large market with a future goal of achieving 3 trillion yen in revenue. That has not hanged.
We will aim to build a future network of 3,000 stores, all while maintaining our focus on store quality.
All our employees will work together to implement local store management and Zen-in Keiei management
principles and become the most sought after brand in the Greater China region.
We hope you will support us as we strive to achieve all our goals.