Top Management Message July 7, 2015

Today Lawson announced its financial results for the first quarter of fiscal 2015, or the three months to May 31, 2015. The main consolidated results are listed below:

• Operating profit 19.1 billion yen
(+13.7% year on year)
• Recurring profit 19.1 billion yen
(+16.0% year on year)
• Net profit 7.7 billion yen
(-15.2% year on year)

Click here for more detailed results.

Throughout the first quarter of fiscal 2015 (March to May 2015), Lawson, Inc. has worked hard to develop concrete activities in accordance with our Corporate Philosophy of “Creating Happiness and Harmony in Our Communities.”

Our core goal for fiscal 2015 has been to strengthen the foundation of our convenience store business by focusing on three key areas: our stores, our products and our franchise system. This will help us respond effectively to social changes in our communities driven by falling birth rates, ageing population, and the increase in the number of women in the workforce. It will also help us highlight and maximize areas in which Lawson displays unique strengths, such as over-the-counter fast food.

In the first quarter, we have focused to improve our staple cooked rice products, making MACHI café more attractive by revising café latte prices, and introducing new packaging at Lawson Select. Our strategy to attract customers with more discounts hit the gross profit margin down by 0.1% year on year in the first quarter, but the same strategy also generated a 0.4% rise in existing-store sales at Lawson Japan.

All of these measures, along with contributions from new consolidated subsidiaries Seijo Ishii Co., Ltd. and United Cinemas Co., Ltd. helped generate a consolidated operating profit of ¥19.1 billion in the first quarter of fiscal 2015. That represents an increase of ¥2.3 billion, or 13.7%, compared to the previous year. Consolidated net profit declined ¥1.3 billion, or 15.2%, year on year to ¥7.7 billion, on the back of increased extraordinary losses.

FY2015 1Q: Key business features

  • As part of our drive to help shoulder risk and create more effective franchise stores, we were able to apply our new-style franchise package to approximately 2,000 additional stores in the first quarter alone, bringing the total number of franchise stores operating under the new-style package to 5,300 at the end of May 2015. Under this package, Lawson agrees to pay a portion of a franchise store’s food disposal costs and energy bills. Our decision to renew franchise contracts with existing stores early during fiscal 2015 is also facilitating the transition to the new-style franchise package.
  • We have begun restructuring operations to make our stores more powerful by improving guidance for franchise stores and introducing improved ordering systems. We have also worked hard to ensure our stores help evoke latent customer needs and always stock the things that customers want.
  • In the staple foods category, we capitalized on Lawson’s renowned ability to procure superior ingredients to launch our new Large Grilled Salmon Lunchbox and Thick Pork Cutlet Lunchbox. Over the first quarter, we have tried to make our overall store layout easier for customers to understand, by concentrating on developing appealing new products and measures in our staple food category, changing the staple food containers and packaging, and holding our first 100 yen rice ball sale in six years.
  • We seek to differentiate our convenience stores with our personal MACHI café service. We also seek to improve quality and contribute to society and the environment by using coffee beans cultivated exclusively in plantations certified by the Rainforest Alliance which ensures adherence to strict environmental, social and economic standards. In terms of our MACHI Café business strategy, our decision to simplify our café latte prices helped boost sales considerably. We are planning to offer donuts along with all of our MACHI Café services. To that aim, we set up our first donut counter in April, and plan to extend the number of stores offering donuts to approximately 8,000 by the end of August 2015.

In terms of our strategy for the second quarter from June to August 2015, we are determined to maintain our strategic direction by continuing to focus on strengthening our store capability, our product potential and our franchise owners support.

Lawson will also continue to lay the foundations for sustainable future growth by promoting further development of Seijo Ishii’s upscale supermarket operations, as well as our entertainment and home convenience operations and our international operation. I am confident that these strategies will help achieve our consolidated operating profit target for 2015.

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 7, 2015
Genichi Tamatsuka
President and CEO
Representative Director

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