We would like to express our thanks to our shareholders for their interest in and support of the Onward Group. During the fiscal year ended February 28, 2011 (fiscal 2011), Onward marked its 64th fiscal period. We are pleased to provide the following summary of Onward's business activities during the year.

In its corporate philosophy, the Onward Group (the Group) has defined its business domain as “creating a world of fashion that gives refreshment and beauty to people's lives.” By offering fashion as an integral part of consumer culture, the Group creates new lifestyles and values that contribute to the enrichment of life for all people.

Based on its Brand-Leveraged Management, the Group works to promote “the creation of brand value” and, by striving to provide products and services of a quality that will meet with customer satisfaction, endeavors to expand the scale and profitability of its business base.

We look forward to the continuing understanding and support of you, our shareholders, as we move forward with the development of the Group's activities.

During fiscal 2011, there were some signs of recovery as a result of policies to stimulate consumption as a part of government economic policies and the increase in demand due to economic growth in the emerging countries. However, as a result of the persistence of difficult employment and income conditions, the sudden appreciation of the yen, and the continuation of deflationary economic conditions, the future course of the economy remained uncertain.

In the apparel industry, signs of a gradual recovery appeared beginning in the fall of 2010, but consumers continued to exercise restraint, and in part because of unseasonable weather conditions, overall consumer spending was weak and a difficult operating environment persisted.

In view of these operating conditions, the Group adopted a new growth strategy involving investments in domestic sales areas and the launching of new products, principally for its high-margin core brands, and working aggressively to expand income. Also, in overseas operations, the Group took steps to improve profitability in the European region, which will be the core driver of growth, and accelerated the expansion of business activities in the rest of Asia.

As a result of these measures, ONWARD KASHIYAMA CO., LTD., and the Group's subsidiaries in Japan and overseas reported performance above plans for the fiscal year.

The outlook is for a continuation of difficult operating conditions. In addition to the uncertainties created by the appreciation of the yen and the employment and income environments, the Great East Japan Earthquake, which struck on March 11, 2011, brought unimaginable destruction in its wake and dealt a severe blow to the economy.

In the apparel-related industry also, the earthquake and its aftereffects, including the need to conserve electric power and scheduled electric power blackouts, are forecast to have a detrimental impact on consumption and economic activity.

Amid this economic environment, the Onward Group will implement its global strategy and promote a growth strategy involving securing stable profits in domestic operations and aggressive expansion in income from overseas activities.

In domestic business operations, ONWARD KASHIYAMA will continue to focus its management resources on its core brands and work to enhance their brand value and expand profitability. In addition, ONWARD KASHIYAMA will strengthen the operation of its flagship freestanding stores, strengthen the message transmitted by its brands, and work to expand sales by developing new major brands for shopping malls. Moreover, in the e-commerce field, we will draw on the comprehensive capabilities of the Onward Group and move forward with the aggressive expansion of these marketing activities, taking a global perspective.

In overseas business operations, the Group will further upgrade the management base of subsidiaries in the European region and enter a stage of aggressive implementation of its global growth strategy. The JIL SANDER Group will launch a new collection, “JIL SANDER NAVY,” in spring 2011 and will work to realize additional synergies with the GIBO'CO. Group, with the goal of attaining higher profitability. In Asia also, the Group will make aggressive investments in production and marketing capabilities to accelerate its growth strategy.