Lawson, Inc. continued to pursue a variety of concrete operational initiatives in the first half of fiscal 2016 (March to August 2016) in line with the company’s Corporate Philosophy of “Creating Happiness and Harmony in Our Communities.” Our “1000 Day Action Plan,” launched in the first quarter of fiscal 2016, is now well into its first year. As part of the plan’s first-year drive, we continued to actively refurbish existing stores by installing more new refrigerator and freezer cases and taller product shelving to display a more bountiful product range. As a result, we were able to significantly expand our product ranges to fully cover customers’ everyday needs. Furthermore, that investment is already starting to bear fruit, with some of the newly refurbished stores generating higher sales, attracting more working women and senior citizens, and reporting higher unit sales of fresh food delivered daily and related categories. As a result of this proactive store refurbishment and the additional advertising and promotion activities laid out in our initial annual plan, consolidated operating profit declined 2.1 billion yen year on year in the first half to 39.9 billion yen. However, this performance was better than the 39.5 billion yen operating profit initially predicted at the start of the fiscal year. In addition, first half consolidated net profit increased by 2.7 billion yen year on year to 22.6 billion yen, owing to a reduction in extraordinary losses.

First-half existing-store sales declined 0.9% year on year, largely due to comparatively weak ticket sales compared to the previous year. Meanwhile, the gross profit margin held firm at 31.3%.

FY2016 1H: Key business features

• We pressed ahead with the project started in the first quarter to strengthen our ranges of delicatessen items, frozen foods, seasonings and other daily items. This involved further aggressive refurbishment of existing stores, expanding our 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 food categories with renewed product ranges and especially attractive items. We expanded the range of Lawson Select private brand products, offering 10% discounts on a portion of Lawson Select products in the chilled and frozen sections and on-the-counter cases in our monthly “Lawson market specials!”
• Lawson farms, located in 23 different areas nationwide, supply safe fresh fruit and vegetables to Lawson Group stores and factories producing original Group products. To ensure appropriate farming management systems at Lawson farms, Lawson has been seeking Japan Good Agricultural Practice (JGAP) certification. In July 2016, the Asia GAP Research Institute presented Lawson and the Lawson Farms Presidents Organization with the coveted 2016 GAP Initiative Award in recognition of our efforts to promote the spread of GAP. The Lawson Group is committed to continuing these activities to ensure the ready availability of safe and secure food products.

Looking ahead, we intend to make further positive headway on our 1000 Day Action Plan in the second half of the fiscal year from September 2016 through February 2017, building on first-half efforts to position Lawson as a vital presence in community life. We are also focused on building a strong foundation for medium- to long-term sustainable growth for our home convenience business and our international operations. One of our key financial targets is to boost consolidated operating profit by 3.4 billion yen year on year in fiscal 2016 to 76.0 billion yen.

The Lawson Board decided at its September 16, 2016 board meeting to support a tender offer for Lawson’s common stock by Mitsubishi Corporation. Mitsubishi Corporation is already Lawson’s biggest shareholder, owning 33.4% of outstanding Lawson stock, but we judged the additional benefits of having Mitsubishi Corporation as a majority stakeholder would be significant, in terms of leveraging the conglomerate’s overall business network and human resources to help expand and entrench the Next-generation LAWSON Convenience Store model. If the tender offer proceeds as intended, Lawson will become a consolidated subsidiary of Mitsubishi Corporation, with Mitsubishi Corporation owning over 50% of outstanding Lawson stock. However, Lawson is expected to remain a public-listed company. I personally will continue in my position as Chairman and CEO of Lawson, and continue with my mission to successfully drive Lawson’s 1000 Day Action Plan.
(Click here for detailed information of the tender offer)

I would like to take this opportunity to assure shareholders that Lawson will continue to attend the stock market carefully as an independent listed company, and heed the views of our shareholders and investors when forming management decisions. I thank you for your continued and unwavering support of Lawson’s management strategy.