Top Management Message January 9, 2015

Today Lawson announced its financial results for the third quarter of fiscal 2014, or the nine months to November 30, 2014. The main consolidated results are listed below:

• Operating profit 59.7 billion yen
(+9.1% year on year)
• Recurring profit 59.7 billion yen
(+8.4% year on year)
• Net profit 32.9 billion yen
(+8.1% year on year)

Click here for more detailed results.

Lawson achieved strong gains in profit in the nine months to November 2014. Consolidated operating profit rose 5.0 billion yen, or 9.1% year on year, to 59.7 billion yen. Our net profit performance was also strong, rising 2.4 billion yen, or 8.1 % year on year to 32.9 billion yen.

Over that nine-month period, we successfully expanded the number of stores offering our MACHI café service, and further enriched our range of foodstuffs for cooking or warming in the home. We have made progress on our underlying strategy aimed at expanding Lawson’s customer base, and providing a product range to better meet local community needs. However, sluggish consumption following the hike in the sales tax in April, continued severe competition by many new opening stores in the industry, and the slump in cigarette sales resulting from falling numbers of smokers all served to knock same–store sales down 1.0% year on year in the nine months from March to November 2014.

Lawson opened 724 new stores and closed 331 stores over the nine-month period, boosting the total number of Lawson stores in Japan by a net 393 stores. This was roughly in line with our initial plan. In addition to the expansion of MACHI café, we also successfully strengthened our range of pre-prepared fast-food items and other higher value-added products. The rise in sales of such high-margin items helped fuel further healthy gains in our gross profit margin, which rose 0.4 point year on year in the nine months to November 30, 2014.

FY2014 3Q: Main business features

  • We increased the number of stores offering our MACHI café service to 9,726 at the end of November 2014. We believe our decision to refresh our MACHI café product range and offer a new S(start)-size coffee in September has helped differentiate our brand and attract a wider range of customers, boosting the competitiveness of our stores in the process. As of the end of November 2014, we had installed Machikado Chubo in-store kitchens in 2,817 stores. We have also extended our over-the-counter fast food range with new flavor of “Ohgon-Chicken” (tender and juicy fried chicken).
  • We have strengthened our range of staple meals by introducing new menus such as our Gyudon beef-on-rice dish. We have also overhauled the whole category by updating our existing menus and repackaging certain items. Our new chilled bento lunchboxes, as advertised on TV, have been selling well.
  • In order to contribute to health and wellness in our communities, we have launched high-fiber soba noodles to complement our original Bran Series. These noodles are designated health foods designed to stabilize blood sugar levels after eating. We continue to expand our range of safe, satisfying and tasty health foods, such as our ready-cut vegetables. These products are farmed according to the leading Nakashima Farming Method which perfects the balance of minerals in the soil to help cultivate superior, healthy vegetables.

The consumer environment has become increasingly uncertain in this second half of the business year despite the government’s decision to postpone the next hike in the sales tax, originally scheduled for October 2015. In addition the competition surrounding new store openings in the convenience store industry is also likely to remain fierce. Given this environment, we believe it is vital to maintain our strong focus on strengthening existing-store sales, and boosting mutual profit opportunities for the Lawson Group and its franchise owners. We intend to fulfill our profit targets for fiscal 2014 by continuing to strengthen our products and services and striving to satisfy our customers during the remaining quarter of the business year.

Lawson understands the vital importance of building a firm operational base in order to help ensure consistent medium- to long-term growth. We intend to continue focusing on capital efficiency and the aggressive strengthening of our domestic convenience store business. At the same time, we will be looking to further develop our entertainment-related business, operations outside of Japan, and home convenience services.

We remain committed to boosting our corporate value by enthusiastically pursuing our corporate philosophy of, “Creating Happiness and Harmony in Our Communities.”

I would like to thank our shareholders and investors for their loyal support of Lawson’s management strategy and competitive approach.

January 9, 2015

Genichi Tamatsuka
President and CEO
Representative Director

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