Top Management Message April 13, 2009

LAWSON today announced its operating results for fiscal 2008, ended February 28, 2009. A summary of our consolidated results is as follows:

  • Operating profit rose 5.5% year on year to 49.1 billion yen.
  • Recurring profit increased 5.5% to 48.7 billion yen.
  • Net profit increased 14.4% to 25.3 billion yen.

Please click here for more details of our fiscal 2008 results.

Fiscal 2008 Highlights

Consolidated operating profit for fiscal 2008 was a record 49.1 billion yen. This result was 5.5% up on fiscal 2007 and marked the 6th consecutive year of earnings growth.

  • (1) Existing store sales were very strong, finishing up 6.5% year on year. One of the major reasons was increased customer numbers resulting from the introduction in Japan of cigarette vending machines requiring taspo cards (adult identification IC cards). However, we also benefited from customers choosing to shop closer to home due to rising gasoline prices. In addition, products other than cigarettes also performed strongly, thanks to the success of various sales promotions and efforts to enhance merchandise assortments in stores. The cumulative number of card members for our proprietary loyalty point cards, meanwhile, reached approximately 8.5 million. Steady sales to these members accounted for roughly 14% of all our sales.
  • (2) LAWSON opened 501 new stores in Japan in the past fiscal year. While this was fewer than planned, we saw an improvement in sales at new stores due to the strict application of in-house store investment criteria; daily sales at new stores improved 69,000 yen year on year to 505,000 yen. Of the new stores opened, 44 were previously operated by Shinsengumi Honbu, with whom LAWSON formed an alliance in January 2008. These stores have seen steady growth in earnings since they were rebranded as LAWSON stores.
  • (3) Consumer purchasing behavior changed considerably in the second half of fiscal 2008 as economic conditions deteriorated, putting the onus on businesses to respond to the needs of belt-tightening consumers. LAWSON has been responding to this trend in a number of ways. With LAWSON STORE100, a perishable food convenience store format we developed in 2005, and the consolidation of Ninety-nine Plus Inc. in the past year, we introduced perishable foods and private brand (PB) Value Line products. As shown by strong sales at existing LAWSON STORE100 stores, I think we have catered well to customer needs in the face of an adverse economic environment.

Fiscal 2009 Measures

In fiscal 2008, we produced strong results due in part to the beneficial effect on our operations of taspo. However, in fiscal 2009, our sales could be negatively impacted as the taspo effect wears off and consumer sentiment cools. In order to steadily generate earnings under these conditions, we plan to implement the following major initiatives in fiscal 2009.

  • 1. Use loyalty point cards and a new IT system to develop merchandise assortments that meet the needs of customers visiting individual stores.
  • 2. Introduce perishable foods and original products and strengthen the development of PB products that match the location of individual stores to increase the number of items offered in small portions that are purchased in various combinations by customers.
  • 3. Improve the gross profit margin by stripping inefficiencies out of the distribution system and raising ordering accuracy.

Up to now, we have worked to improve merchandise assortments, customer service and store cleanliness. From this base, and by implementing the abovementioned initiatives, with franchise owners and LAWSON's Head Office working as one, I believe that we can achieve an approximate 3% increase in consolidated operating profit even under trying economic conditions.

Regarding shareholder returns, we hope to maintain the annual dividend at 160 yen per share in fiscal 2009.

Going forward, we ask for the continued understanding and support of LAWSON shareholders and other investors.

April 13, 2009

Takeshi Niinami
President & CEO

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