Top Management Message May 22, 2003

On Tuesday, April 15, we released our fiscal 2002 results for the year ended February 28, 2003. Although total net sales edged up slightly, earnings declined due to higher costs associated with IT investment and other factors. I am pleased to report, however, that we managed to hit the profit targets we announced in our interim earnings release, thanks to an improvement in the gross profit margin and reductions in selling, general and administrative expenses. Further details of our fiscal 2002 results and our plans for fiscal 2003 can be found on this website.

In fiscal 2002, we attempted to energize front-line operations with investments in the second half of the fiscal year, after having taken a defensive posture in the first half with cost-cutting initiatives. One highlight was the creation of the Onigiriya rice ball brand. This brand turned out to be a major hit with customers, helping to propel existing store sales for December 2002 above levels achieved in the same period in 2001. This marked the first time in one and a half years that sales have bettered the same month of the previous year. And as employees and owners take a more positive approach they are helping to drive a turnaround in our results. That makes Fiscal 2003 very important - from the perspective of ensuring that we use this more upbeat mood to translate the measures implemented in fiscal 2002 into concrete results.

To continue our recovery, we have outlined the following key strategies for fiscal 2003. They are integral components of Lawson Challenge 2004, our medium-term management plan, which contains reforms to revitalize Lawson and drive growth.

<Key Strategies for Fiscal 2003>

1.Optimization of Value Chain (Improve Products)

  • - Improve rice ball, lunch box, delicatessen, prepared bread, dessert and bakery lineups
  • - Realign factories
  • - Offer products that more closely reflect regional preferences
  • - Create a product development framework that places emphasis on three keywords - safety, trustworthiness and health

2.Energize Front-Line Operations

  • - Bolster the store supervisor training system Enhance knowledge regarding ordering, customer relations and cleaning
  • - Use the self-contained company system to promote operations that more closely reflect regional needs

3.Develop business using new store formats created through alliances (Expand store network by attracting customers and developing new store sites)

4. Further differentiate Lawson from competitors by growing new businesses

On March 1, 2003, we introduced a system of self-contained companies, or regional headquarters, in seven regions across Japan. The aim of this new framework is to make Lawson "the 'hot' station in the neighborhood," admired by local communities throughout Japan. Lawson and its owners are united in their efforts to attract customers to stores more frequently. This will help to raise owners' profits and to achieve the goals of our medium-term management plan.

Lawson has made good progress in recent times. I hope to be able to report more success in the coming months.

May 22, 2003

Takeshi Niinami
President and CEO

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