Top Management Message　January 6, 2006

Today, LAWSON announced its operating results for the third quarter of fiscal 2005, ending February 28, 2006. During the period under review, positive movements in consumer spending and housing investment boosted expectations of an economic recovery. Nonetheless, the GDP deflator remained below zero. Moreover, it continues to be impossible to apply the same yardstick to the entire country: while the trend in the Kanto and Chubu regions is toward recovery, in other regions harsh economic conditions persist.
Owing to unusual weather conditions, including unseasonably warm temperatures in September and October and an unexpected cold snap in November, and the discontinuation of Highway Card sales in September, existing store sales became worse, falling below the fiscal 2004 third quarter level. Nonetheless, our strong emphasis on profitability meant that existing store markups outpaced existing store sales. (For a full summary of our fiscal 2005 third quarter results, please click here.)

The occasion of our 30th anniversary, which made 2005 a particularly memorable year for LAWSON, presented an opportunity for all to reexamine our raison d'être. As a result of this, we revamped our corporate philosophy, which is the foundation of all we do. A company's corporate philosophy embodies an ideal that is, in essence, the guiding principle that directs its activities.Accordingly, revamping our philosophy was a major step that in effect marked the beginning of a new phase in LAWSON's history. As I have consistently stated, our goal is to make each LAWSON store an indispensable part of its local community. To this end, we will reinforce corporate social responsibility as the cornerstone of the LAWSON culture and ensure the commitment of each member of the LAWSON family—store owners, store crew (part-time workers) and employees—to socially responsible practices. Whenever I visit LAWSON stores in rural districts, I am reminded how fast Japanese society is aging. To date, the convenience store industry has not really allowed for the creation of stores that respond to the needs of seniors and women.. Going forward, we recognize the need to revise our approach to store development—that is, to creating products, determining product lineups and designing sales areas—to reflect preferences of these two important customer segments.
The realignment of Japan's retail industry is gathering speed, and companies are focusing their energies on ensuring survival. In this environment, I am confident that we will continue to earn the support of customers by emphasizing innovation, rather than relying on our success in the operation of conventional convenience stores. I look forward to a promising future for LAWSON and its stakeholders.

January 6, 2006

Takeshi Niinami
President and CEO

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