Top Management Message July 11, 2016

Today Lawson announced its financial results for the first quarter of fiscal 2016, or the three months to May 31, 2016. The main consolidated results are listed below:

• Operating profit 17.4 billion yen
(-8.8% year on year)
• Recurring profit 16.6 billion yen
(-12.9% year on year)
• Net profit 8.8 billion yen
(+14.3% year on year)

Click here for more detailed results.

Throughout the first quarter of fiscal 2016 (March to May 2016), Lawson, Inc. has worked hard to develop concrete activities in accordance with our Corporate Philosophy of “Creating Happiness and Harmony in Our Communities.”

The ageing population and an increase in the number of 1 or 2 person households continues to affect the market environment of our communities, and the convenience store industry also continues to face industry consolidation. We believe the next three years will prove key milestones for us, and thus we have launched the “1000 Days Action Plan” starting from fiscal 2016. The action plan is focused on building a next-generation Lawson-style convenience store using our business model as a manufacturing retailer based on small commercial areas, which will enable us to realize unprecedented store productivity and fulfill our customers’ everyday needs.

In the first quarter from March to May 2016, Lawson made efforts to implement various ways to encourage customers to visit their local Lawson for their daily needs. To achieve that aim, we began strengthening our product ranges, invested in new refrigerator and freezer cases for existing stores and invested in more proactive advertising and promotion. While first-quarter existing-store sales declined 1.0% year on year on comparatively weak ticket sales compared to the previous year and declining cigarette sales, the gross profit margin improved 0.1 point to 31.3%.

Non-consolidated operating profit declined 1.6 billion yen year on year to 13.7 billion yen, and consolidated operating profit also declined 1.6 billion yen to 17.4 billion yen. However, following the refinement of impairment-loss reporting at the end of fiscal 2015, we recorded a significant year-on-year decline in impairment losses in the first quarter of fiscal 2016, and a subsequent decline in extraordinary losses. As a result, first-quarter consolidated net profit rose 1.1 billion yen year on year to 8.8 billion yen.

FY2016 1Q: Key business features

  • In order to strengthen our ranges of delicatessen items, frozen foods and seasonings to better meet customers’ daily needs, we began aggressively refurbishing existing stores in the first quarter, expanding product display capacity by installing new refrigerator and freezer cases and taller display cases, and increasing the number of display shelves. We also worked hard to boost visibility of such food categories as renewed Lawson Select private brand products. We expanded the range of Lawson Select series and offered 10% discount sales in our monthly “Lawson market specials!”.
  • To mark the 30th anniversary of our karaage-kun fried chicken counter food, we released a new “dekaraage-kun (large karaage-kun) dream taste mix,” which proved very popular with customers. We strived to meet the everyday needs of customers by releasing new lemon-flavored fried chicken and croquet potato items, and boosting our instore prepared food ranges.
  • Lawson also focused heavily on sales of health-conscious items in its capacity to contribute to “Health and Wellness” in our communities. Our Natural Lawson Green Smoothie, which offers a whole meal’s worth of vegetables in one drink, continues to prove extremely popular with female and health-conscious customers. A year after its initial launch, the Green Smoothie continues to generate strong sales. As part of our commitment to supporting customer health, we continued to develop healthcare-focused LAWSON stores in conjunction with pharmacies and drugstore chains, offering a broader range of non-prescription drugs, beauty products and daily items in addition to our regular produce.

We will continue to implement our 1000 Days Action Plan in the second quarter from June to August 2016, building on first-quarter efforts to position Lawson as a vital presence in community life. Looking further ahead, we are focused on building a strong foundation for medium- to long-term sustainable growth for our home convenience business and our international operations. As one step on that path, we aim to boost consolidated operating profit by 3.4 billion yen year on year in fiscal 2016 to 76.0 billion yen.

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

Thank you.

July 11, 2016
Genichi Tamatsuka
Chairman and CEO
Representative Director

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