Our cumulative sales at existing stores (non-consolidated basis) for the first nine months increased 0.1% year on year in spite of the effects of the waning consumer sentiment that was triggered by the global economic slowdown and a higher-than-expected decrease in cigarette sales. We are regarded highly by our customers　because convenience stores provide value as social infrastructure by bringing essential items at all times right to the neighborhood of customers. We are pleased that our customer base has continued to be diversified and the number of loyal customers has been steadily increasing. We believe this was attributable to our efforts to optimize merchandise assortments to match customer needs. We strengthened the offering of perishable foods and developed products by leveraging our customer relationship management (CRM) based on analysis of our loyalty card data and our supply chain management (SCM) including procurement of high-quality raw materials. In addition, we pursued creation of added value in the value chain and improved accuracy in order placement by use of our ongoing business reform PRiSM. They contributed to a 0.6 percentage point improvement in gross profit margin on products excluding cigarettes compared to the previous year.

As a result, consolidated operating profit increased by 3.7 billion yen or 7.5% year-on-year to 53.4 billion yen. Net profit amounted to 28.5 billion yen, increased 7.9 billion yen from the first nine months of the previous year

• We developed products that match customer needs by using purchase data from our multi-partner loyalty program Ponta card members. For example, the Grilled Lasagna Bolognese that was launched under our original brand Pasta-ya resulted in a great hit. This menu item was bought by many customers in their 20's and 30's rather than regular pasta menu. We strived to add more value in the raw material procurement process by bulk purchase of high-grade food ingredients. This has enabled us to develop merchandise having good value relative to the price, which led to an increase in gross profit margin.
• In response to customers' new needs and improvement of store profitability, the number of Lawson convenience stores which offer freshly-brewed "MACHI café" was increased to 2,253. Face-to-face selling, not self-service selling, has realized more hospitable services, while more customers were prone to buy a dessert item together with coffee.
• With the aim of attracting new clientele such as women and seniors, we increased the number of "fresh food-type LAWSON" stores with a stronger assortment of perishable foods and daily delivered foods by converting existing stores and opening new ones. On October 30, 2012, we issued our "Fresh Foods Convenience Store Declaration" for all stores and strengthened our lineup of pre-cut vegetables and other perishable food items. The number of such fresh food-type LAWSON stores totaled 5,027 by the end of November. In addition, we promoted sales of prepared fast foods such as fried chicken in response to our customers' growing needs to buy ready-made meals. We also encouraged multi-item purchasing by expanding the lineup of processed foods such as seasoned cooking mixes.

In the fourth quarter, we will continue to implement the fiscal 2012 management policies which aimed at achieving "Creating Happiness and Harmony in Our Communities." Our particular focus will be made on expanding our customer base by providing them with perishable foods and prepared fast foods.

Even in such a tough business environment, We believe that our profit plan for fiscal 2012 is achievable. Moreover, we plan to make further progress in our overseas business as well as in the entertainment and e-commerce businesses, all the while strictly adhering to our ROI standards. We will further establish the basis for achieving long- and medium-term sustainable growth.

I would like to thank you, our shareholders and investors, for your continuous understanding and support.

January 9, 2013

Takeshi Niinami
President & Chief Executive Officer

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