Top Management Message July 5, 2010

LAWSON today announced its operating results for the first quarter of fiscal 2010, ending February 28, 2011. A summary of our consolidated results is as follows:

  • Operating profit declined 8.2% year on year to 11.2 billion yen.
  • Recurring profit decreased 9.1% year on year to 10.9 billion yen.
  • Net profit dropped 31.7% to 4.0 billion yen.

Please click here for more details of our fiscal 2010 first-quarter results.

Existing store sales declined 4.9% year on year due to the impact of external factors such as the economy and weather. However, selling, general and administrative expenses declined approximately 1.0 billion yen mainly due to a decline in store crew wages stemming from a decrease in the number of Company-operated stores. As a result, consolidated operating profit was slightly below estimate at 11.2 billion yen.

Consolidated net profit was sharply down on the corresponding period of the previous fiscal year, when the bottom line was boosted by special gains from the merger of subsidiaries. In terms of our fiscal 2010 plan, net profit fell only slightly short of the target.

The major highlights of the first quarter of fiscal 2010 were as follows.

We began full-scale operations of our next-generation IT system PRiSM, installation of which was completed by the end of fiscal 2009. Together with the Three Challenge Practices*, I believe this initiative will lead to a further improvement in earnings power of individual stores once stores tap the full potential of the system.

The number of Ponta cards issued rose steadily to approximately 23 million; Ponta is a multi-partner shopping points program that LAWSON joined in March 2010. Loyalty Marketing, Inc. issues the cards, operates and manages the program. Sales to members accounted for approximately 26% of our total sales.

We recently began introducing the LAWSON Kobe Hot Deli, a new system for preparing food in-store as an investment in a future growth field.

As in the first quarter, we will continue to implement the initiatives described above in the second quarter, with the aim of improving the earnings of franchise stores as well as achieving our full-year earnings target.

On July 1, LAWSON ENTERMEDIA INC. and Ninety-nine Plus Inc. became wholly owned subsidiaries of LAWSON. We are now working to capture greater synergies with these Group members to raise our earnings.

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

July 5, 2010

Takeshi Niinami
President & Chief Executive Officer

*The Three Challenge Practices are points that franchised store owners, employees and store crews (part-time and casual workers) must pay particular attention to in running LAWSON stores. The objectives are (1) ensuring merchandise assortments matched to each location, (2) serving customers courteously, and (3) keeping stores and surrounding areas clean.

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