Consolidated operating profit for the first nine months of fiscal 2008 rose sharply by 14.3% year on year to a record 43.3 billion yen.

• (1) Existing store sales increased by 6.6% from the corresponding period of the previous fiscal year. This was mainly due to increased patronage stemming from the introduction of cigarette vending machines requiring taspo cards (adult identification IC cards). Products other than cigarettes also performed strongly, thanks to the success of efforts to enhance merchandise assortments in stores and various sales promotions.
  The cumulative number of card members for our proprietary loyalty point cards, meanwhile, reached approximately 7.8 million. Steady sales to these members accounted for roughly 14% of all our sales.
• (2) LAWSON opened a total of 317 LAWSON and NATURAL LAWSON stores during the first nine months of fiscal 2008 in Japan. When opening stores, we emphasized quality over quantity, applying strict in-house criteria. While this selective approach stressing quality resulted in a slight delay in our store opening plans, it produced a large 85,000 yen year-on-year improvement in daily sales at new stores, to 524,000 yen. Of the new stores opened, 43 were previously operated by Shinsengumi Honbu, with whom LAWSON formed an alliance in January 2008. These stores have seen extremely steady growth in earnings since they were rebranded.
• (3) In September 2008, LAWSON made Ninety-nine Plus Inc. a consolidated subsidiary following a public tender offer for the latter's shares. Since then, LAWSON has aggressively converted SHOP99 stores operated by Ninety-nine Plus into LAWSON STORE100 stores through a process of resignage and refurbishment. Furthermore, by March 2009 we expect to have some 500 products in our Value Line, a private brand jointly developed by Ninety-nine Plus and VALUE LAWSON, Inc. Our perishable foods convenience store business is growing strongly, with belt-tightening consumers providing a boost in more recent times. We aim to capture still more synergies with Ninety-nine Plus going forward.
• (4) Regarding subsidiaries, LAWSON ATM Networks, Inc. and LAWSON TICKET INC. were the chief contributors to consolidated earnings, as in the first half of the fiscal year.

These developments enabled us to post strong results in the past nine months. However, there is increasing evidence that the sudden deterioration in the world economy is having a major impact on Japan's economy too. As we move forward, cooling consumer sentiment could negatively affect our sales in no small way. But we plan to counter this tumultuous change in macroeconomic conditions. Expect to see us launch new products meshing with customer needs and fully utilize our loyalty point cards, as we remain determined to realize our vision of LAWSON as "the 'hot' station in the neighborhood."

We ask for the continued understanding and support of LAWSON shareholders and other investors.

January 8, 2009

Takeshi Niinami
President & CEO

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