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To the Shareholders:
In the year under review, consolidated net sales increased slightly over the previous fiscal period due to the sluggish retail market in U.S. & Europe and decrease in Yen translation amount due to yen’s appreciation against the U.S. dollar. In contrast, gross profit rose thanks to an improved gross margin in Japan, where we undertook rigorous controls aimed at refining the production-sales balance. Operating income surged 340.9% due to successful cost-cutting efforts. Highlights in FYE2008 to pursue “Growth with sound profitability” To achieve managerial agendas, (1) optimize the brand portfolio, (2) achieve profitability of growing and turnaround brands, we ceased the Proof brand in Japan, the Jean-Michael Cazabat brand in the United States, and streamlined casual businesses in Japan. To ensure steady growth of Theory brand, we sustained growth in Japan and U.S. market and we opened three retail stores in London this year in addition to Paris store which opened last year, a move to cultivate European market. In Asian market, we currently operate 11 directly managed stores in mainland China and Hong Kong, and there’re 40 stores in Korea, Taiwan, and Singapore operated by local partners. Due to increasing uncertainty about the world economy, we perceive it necessary to withdraw our goal in mid-term plan “LTH 2010”, i.e. ¥80 billion in net sales, ¥6 billion in operating income in FYE August 2010. Even though, our managerial agendas are bearing fruit worldwide, and we will continually tackle to achieve 7.5% operating margin in FYE 2010. LTH appreciates your continuing support. November 2008 Ricky C. Sasaki President & CEO |
