Consolidated operating profit, recurring profit and net profit for the first nine months of fiscal 2013 all reached record highs.

Our cumulative sales at existing stores (non-consolidated basis) for the first nine months decreased 0.5% year on year. We endeavored to expand our customer base and make merchandise assortments better match the needs of customers in each community by introducing freshly-brewed coffee MACHI café for the first time at convenience stores and strengthening our offering of food ingredients to be prepared and eaten at home. However, weak cigarette sales caused by the ongoing trend of a decrease in the number of smokers, which continued from the first half, and inclement weather had an adverse impact. Despite decrease in sales, gross profit margin continued to rise 0.5 percentage points in the first three quarters compared to the previous year. This significant increase was driven by the development and sales of high-value-added products such as freshly-brewed coffee and in-store prepared food aimed at further expansion of our customer base.

Consequently, consolidated operating profit for the nine-month period increased by approximately 1.3 billion yen or 2.4% year on year to 54.7 billion yen. Net profit also rose by approximately 1.9 billion yen or 6.7% year on year to 30.4 billion yen, which partly reflected a year-on-year decline in impairment losses stemming from our efficient store-opening strategy of emphasizing investment efficiency.

■Key initiatives for the Third Quarter FY2013

• Lawson aims to increase revenues at franchise stores by enhancing customer engagement, especially from new customer segments such as women and seniors, and introducing high-margin products. To drive this forward, Lawson increased the number of stores which offer freshly-brewed coffee or in-store cooked items. Consequently, at the end of November, the number of Lawson stores which offer freshly-brewed coffee MACHI café rose to 6,380 (compared to 2,860 stores at the end of February 2013) and the number of stores with an in-store kitchen facility named Machikado Chubo increased to 1,846 (from 462 stores at the end of February 2013). In addition, Lawson’s “Ohgon-Chicken” (tender and juicy fried chicken with a golden, crispy crust), a fast food served over the counter, became highly popular and led the growth of fast food sales.

• In order to achieve sustainable growth leveraged by our differentiation strategy, we have set a mid-term vision to focus on the “health” of customers in our communities and announced this vision on October 8. The demographic changes affect the customer base of convenient stores and it has become increasingly necessary to increase the share of women and senior customers. Lawson will continue to support customers’ healthier lifestyles through the launch of over-the-counter (OTC) drugs and healthy products, as well as health management services for Ponta card members. We have several products which have won the support of many customers, such as Bran Bread with low carbohydrate-containing and pre-cut vegetables made with vegetables produced based on the Nakashima Farming Method, a cultivation method that supplies the appropriate nutrients based on the growth status of crops and the nutritional balance of the soil (mineral balance).

• The number of Ponta cards issued grew favourably to more than 59 million (as of the end of November 2013) and sales to card members represented 49% of LAWSON’s store sales. The information on customer attributes accumulated through Ponta cards helps us to better understand customer needs in greater detail, as we compile and analyze abundant purchasing data linked to more than ten thousand stores. Since the start of this fiscal year, as we have been providing the results of purchasing data analysis to individual stores, we have enabled further enhancement of merchandise assortments to better meet the needs of our valuable customers and refined our area strategy.

Although the market environment remains highly competitive, we strive to achieve our fiscal 2013 profit targets as we continue to expand our efforts to reach this goal. In addition, we plan to make further progress in our overseas business and entertainment/home convenience store business while strictly adhering to our return on investment (ROI) standards, and to build solid foundation for sustainable medium- to long-term growth.

I would like to express my gratitude to our shareholders and investors, for your continued and unwavering support.

January 9, 2014

Takeshi Niinami
Chief Executive Officer
Representative Director

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