Top Management Message July 4, 2014

Today Lawson announced its financial results for the first quarter of fiscal 2014,
or the three months to May 31, 2014. The main consolidated results are listed below:

• Operating profit: 16.8 billion yen
(+17.6% year on year)
• Recurring profit: 16.5 billion yen
(+14.5% year on year)
• Net profit: 9.0 billion yen
(+26.5% year on year)

Click here for more detailed results.

In the first quarter of fiscal 2014 from March to May, we worked tirelessly to extend the business strategies designed to realize Lawson’s Corporate Philosophy:”Creating Happiness and Harmony in Our Communities.” Throughout the first quarter, we offered various superior products and services designed to help actively expand our customer base, and ensure our product ranges satisfied local community needs. We expanded our MACHI café service, where store crews take the time to grind fresh coffee and hand it directly to customers with a smile. This is part of our drive to differentiate ourselves from other competitors who offer self-service coffee. We also offered the “Pure Series,” a range of additive-free products made from superior quality ingredients, in our dessert and bakery categories. These efforts were rewarded in the first-quarter results, when, despite the temporary drag on sales caused by the April consumption tax hike, same-store sales at Lawson Japan increased by 0.7% year on year. The gross profit margin also improved 0.5 point year on year in the first quarter, thanks to our determined development of high value-added products, such as the Pure Series and the “Delicious! Local Specialities” range made from locally sourced ingredients, and also to the development and expansion of high-margin foodstuffs, such as prepared foods and delicatessen items.

As a result of the above activities, Lawson reported significant gains in profit in the first quarter, with consolidated operating profit expanding by 2.5 billion yen, or 17.6%, year on year to 16.8 billion yen, and consolidated net profit increasing by 1.9 billion yen, or 26.5%, to 9.0 billion yen.

FY2014 1Q: Key business features

  • In an attempt to increase support among female and elder customers, and also boost profitability at our franchise stores, we increased the number of stores offering the MACHI café service even further to 8,760 at the end of May 2014, compared to 7,776 stores at the end of February 2014. Strong sales of the latest flavors in our highly-popular Kara-age Kun (chicken nuggets) range also contributed to the increase in the gross profit margin.
  • The number of new Ponta cards issued continued to grow favorably, with member purchases now accounting for over 50% of sales. We continue to analyze the purchasing data of Ponta card members to help us develop products that best suit local customer needs in terms of taste, age and gender. We are also using Ponta member data analysis for individual stores to help compile the optimum merchandise assortment for each individual store, and attract more customers.
  • Our range of original healthy sweets has proved a big hit with today’s health-conscious consumers. The range includes sweets with less than 200kcal energy, 10g sugar, or 0.5g salt. We have also developed wheat-bran cookies and snacks, lactobacillus marshmallows and crackers, and konnyaku chips together with specialist manufacturers, as part of our ongoing commitment to contribute to society through food, and help ensure people can enjoy long and healthy lives.

We remain dedicated to our current business strategy and intend to press ahead with further active measures in the second quarter of fiscal 2014. We are determined to steer through the current turbulent external environment of aggressive store openings by competitors and unsettled summer weather, so that we can achieve our first-half profit targets for the six months through August 2014. We will also promote further development of our overseas operations, entertainment services and home delivery business in order to build a strong foundation for sustainable mid- to long-term growth of Lawson, Inc.

I would like to thank our shareholders and investors for your continued and unwavering support of Lawson’s management strategy, and I look forward to serving you in the years ahead.

July 4, 2014

Genichi Tamatsuka
President and CEO
Representative Director

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