Top Management Message October 8, 2009

LAWSON today announced its operating results for the first half of fiscal 2009, ending February 28, 2010. A summary of our consolidated results for the year to date is as follows. Consolidated operating profit, recurring profit and net profit were all higher than the corresponding period of the previous fiscal year.

  • Operating profit rose 3.6% year on year to 30.1 billion yen.
  • Recurring profit rose 3.0% year on year to 29.7 billion yen.
  • Net profit rose 3.4% to 16.0 billion yen.

Please click here for more details of our fiscal 2009 six-month results.

Main Highlights of Fiscal 2009 First-Half Results

In the first six months of fiscal 2009, existing store sales on a non-consolidated basis edged down 2.0% year on year for a number of reasons. One was that the beneficial contribution from the introduction in Japan of cigarette vending machines requiring taspo cards (adult identification IC cards) ran its course. In addition, the domestic economy has remained sluggish since the end of the previous fiscal year, consumer sentiment has deteriorated and weather throughout the term was unseasonable. These factors combined to make for a difficult business environment.

On the other hand, the gross profit margin was 0.1 of a percentage point above plan thanks to improvements in purchasing conditions due to increased distribution efficiency and progress with systematic ordering and materialization of the benefits of actions to revamp our raw materials procurement process.

We continued to actively support franchise owners, mainly in terms of merchandise assortments, which is an ongoing policy. On the other hand, we have rationalized existing IT (information system) expenses and cut headquarters expenses, in addition to running campaigns in accordance with our ROI standards. Even so, earnings fell slightly on a non-consolidated basis as a result of underperforming in terms of sales.

Regarding consolidated subsidiaries, Ninety-nine Plus Inc., which is developing the LAWSON STORE100 and SHOP99 fresh food convenience store formats, made a noteworthy contribution to consolidated operating results as it enjoyed continued support mainly from housewives, the middle aged and elderly, for helping them to manage household budgets by providing valuable products at a single, affordable price. Moreover, LAWSON ATM Networks, Inc., which installs and operates ATMs, and entertainment business company LAWSON ENTERMEDIA, INC. also turned in strong performances.

As a result of the above, consolidated operating profit was 30.1 billion yen, up 3.6% year on year.

In the second half of the fiscal year, our operating environment will more than likely remain difficult.

In terms of store operations, we plan to utilize card data from the more than 10 million members of our proprietary loyalty point cards and leverage the full-scale launch of a next-generation IT system to create merchandise assortments that cater more closely to local customer needs. Our goal is to raise gross profit at existing stores. I believe that we can achieve our initial full-year profit plan by improving the gross profit margin further through ongoing structural reforms including improvement of procurement, distribution and order accuracy as well as reviewing unnecessary costs at headquarters.

While our aim in the short term is to meet our profit plan, we will continue to make key investments for ensuring sustained growth over the medium and long terms. We will invest to help franchise owners and in the development of our fresh food convenience store formats, for example.

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

October 8, 2009

Takeshi Niinami
President & CEO

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