Lawson, Inc. is driving its business 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.

Looking at the third quarter of fiscal 2015 (September to November 2015) in detail, in October, we launched another campaign, similar to the one we conducted in June, offering limited special products to celebrate Lawson’s 40th year in business. We also launched our “Passionate about Taste Project,” which involved a fundamental review of product manufacturing processes and a fresh focus on superior ingredients, manufacturing methods and taste. In addition, we conducted a number of sales and campaigns designed to attract more customers. As a result, while the cumulative gross profit margin for the nine months to November 2015 held almost flat year on year, same-store sales at Lawson Japan increased 1.6% year on year on the back of a successful pickup in customer numbers.

All these measures, along with contributions from newly acquired subsidiaries SEIJO ISHII and United Cinemas, helped consolidated operating profit expand by 3.8%, or 2.2 billion yen, to 62.0 billion yen in nine months to November 2015. Meanwhile, consolidated net profit contracted 4.5%, or 1.4 billion yen, year on year to 31.4 billion yen. The decline in profit was caused mainly by a drawdown on deferred tax assets following cuts in the statutory effective tax rate, and higher extraordinary losses for the period.

FY2015 3Q: Key business features

• We began introducing a semi-automatic ordering system in June to help stores order appropriate amounts of ready-made food and other products. The system got off to a smooth start, enabling us to successfully introduce the new ordering system into almost all of our stores by the end of November. We continued to encourage existing stores to shift to the new franchise contract, under which Lawson HQ commits to pay a portion of product disposal and electricity costs. This, along with our efforts to transform store operations by offering stronger franchise store guidance, should help spark latent customer needs, and also ensure that the very products customers want to buy are always on our shelves.
• In our staple food category, we continued the product development initiatives and policies started in the first half of fiscal 2015 to help attract more customers. In June, we kicked off our Truly Tasty Project with our Niigata koshikhari sockeye salmon lunchbox. Since then, we have introduced new items each month. We also conducted a number of special promotions including 100-yen sale of rice balls, and 10% off fried foods and deli items.
• As part of our health-promotion initiative, we launched Green Smoothie product under “NATURAL LAWSON” brand, and we also offered steamed chicken salad bowl item as part of our Passionate about Taste Project. The Green Smoothie proved extremely popular with customers, selling 13.0 million units by the end of November 2015. We remain committed to enhancing community health by promoting health-conscious food consumption.

The competition for new store spots remains rife in the convenience store industry, but we are determined to continue our current management strategy through the third quarter of fiscal 2015, focusing on strengthening store capabilities, improving product offering and providing better support for franchise stores.

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.