In the third quarter of fiscal 2016 between September and November 2016, Lawson, Inc. pressed ahead with a variety of concrete initiatives designed to progress its Corporate Philosophy of “Creating Happiness and Harmony in Our Communities.” In this the first year of our “1000 Day Action Plan,” we have been actively refurbishing existing stores by installing new refrigerator and freezer cases and taller product shelving. This enabled us to significantly expand our product ranges to fully cover customers’ everyday needs. In addition to this aggressive store refurbishment, we also injected more funds into strengthening financial support for our franchise stores with items such as advertising and other expenses. As a result, consolidated operating profit declined 4.3 billion yen year on year to 57.6 billion yen in the nine months to November 2016. However, consolidated net profit increased by 2.3 billion yen year on year to 33.8 billion yen, due to a reduction in extraordinary losses.

Existing-store sales declined 0.4% year on year in the first nine months following a considerable decline in sales in the first half. However, over the three months from September to November 2016, the gross profit margin held firm at 31.4% and existing-store sales actually increased by 0.6%. The consistent expansion of product ranges so far this business year is attracting more working women and senior citizen customers. Looking ahead, we intend to work hard to further strengthen our product offering and help secure Lawson to become an essential part of our communities.

FY2016 1Q-3Q: Key business features

• We expanded the range of Lawson Select private brand products, mainly in daily delivered foods and the chilled and frozen sections, to encourage customers to visit Lawson stores for their daily shop. We also worked hard to boost awareness of food categories with new, stronger product ranges. In total, we offered a 10% discount on a portion of Lawson Select products in chilled and frozen sections and on-the-counter cases through our monthly “Lawson market specials!”
• We capitalized on the long-standing experience and expertise of NATURAL LAWSON to develop a soup menu that satisfied the needs of health-conscious customers looking to consume more vegetables. The products proved especially popular among female customers.
• We instigated some proactive and effective promotions such as to earn 5 times bonus Ponta points campaign on cooked meal boxes, gratins, soups and Lawson Select chilled foods purchased from the evening to the night.

Moving forward, we will continue to strengthen our product offering in core categories such as over-the-counter fast food, and lunchboxes, etc., and strengthen our stores by expanding product ranges to ensure we cover all daily needs. Both actions are designed to help achieve our key financial target to boost consolidated operating profit to 76.0 billion yen in fiscal 2016. To help build a solid foundation for medium- to long-term sustainable growth, we have been strengthening our home convenience business and our international operations. We also set up Lawson Bank Preparatory Company in November 2016 as a financial services arm of the business. Throughout 2017, we will press ahead with our 1000 Day Action Plan to position Lawson as an essential part of our communities, and further develop Lawson’s Next-generation Convenience-Store business model.

At its meeting on December 21, 2016, the Lawson Board decided to approve Mitsubishi Corporation’s tender offer for Lawson’s common stock, having successfully fulfilled all conditions, including final procedures stipulated under competition law in Japan and international markets. While Mitsubishi Corporation will own over 50% of Lawson stock post-tender, Lawson will remain an independent public-listed company and will continue to heed the views of its shareholders and investors when forming management decisions. Lawson intends to further leverage Mitsubishi Corporation’s overall network and human resources to help maximize corporate value. I personally am excited about the benefits this new development and a new year will bring, and I would like to take this opportunity to thank all of our shareholders and investors for your continued and unwavering support of Lawson’s management strategy.