Throughout FY2017, Lawson, Inc. pursued business activities that gave concrete shape to our corporate philosophy; “Creating Happiness and Harmony in Our Communities”.

First, the Lawson Group opened 1,250 stores and closed 369 stores in the twelve months to February 2018, resulting in a net increase of 881 stores and a total number of 13,992 convenience stores in Japan at the end of February 2018.

Second, Lawson maintained steady existing-store sales (-0.1% y/y). Breaking that figure down, the adverse impact of typhoon in October and increasingly severe competition from various industries led to a 1.3% year-on-year decline in customer numbers. However, the average spending per customer rose 1.3% year on year, thanks to an ample range of daily delivered foods and frozen food items, and stronger product ranges in the rice related products and dessert categories.

As a result, the Lawson Group achieved all store sales of convenience store business in Japan (including ticket etc.) of 2,597.1 billion yen (+5.8% y/y) in FY2017.

Fiscal 2017 marked the second year of our “1000-Day Action Plan” project, and the year in which we made necessary investments to ensure sustainable growth. We have been building next-generation systems, preparing to enter the financial industry, and actively expanding store numbers by opening new stores and encouraging brand conversions from other convenience store chains. We also decided to extend greater support to franchisees by shouldering a portion of franchisee disposal losses and electricity charges. As a result, consolidated operating profit declined 10.8%, or 7.9 billion yen, year on year to 65.8 billion yen in FY2017. Consolidated net profit declined 26.3%, or 9.5 billion yen, year on year to 26.8 billion yen, caused in part by the reporting of systems-related extraordinary losses.

Key focuses for FY2018

The convenience store environment is facing considerable change; changing social structures such as lower birthrates, an ageing society and the growth of the nuclear family, changing lifestyles, the development of digital technology and the growing role of e-commerce in our society. In response to these evolving circumstances, Lawson is seeking to satisfy a broader customer base that includes women and elderly customers, strengthen product appeal in the evening and nighttime hours, strengthen store displays, embrace rapidly advancing digital technology, and maximize the inherent value of its physical store network.

We aim to fundamentally strengthen Lawson’s core boxed meals, rice balls and dessert ranges. We also intend to enrich our range of over-the-counter fast food packs and delicatessen items, and expand the number of stores equipped with Machikado Chubo, in-store kitchen, from the current approximately 4,000 stores to approximately 6,000 stores by the end of February 2019. We are also working to develop our Tasty Health ranges by extending the successful FY2017 More Vegetables! series from our boxed meals category to cooked noodles and sandwich products as well.

Furthermore, we are adapting our ordering and distribution systems to enable us to focus on expanding evening and nighttime sales, and offering extra support to help optimize work schedules using the tablets introduced in FY2017. We are strengthening franchisee support by attempting to improve store productivity with such measures as introducing POS registers with automatic change dispensing machine into all stores and expanding the number of stores with dishwashers.

Already in FY2018, we have launched our LAWSON FRESH PICK service that enables customers to reserve fresh food and meal kits in the morning via our app and then purchase and pick up the fresh produce in the evening from a LAWSON store. We have also applied for the Preliminary Examination of License of Banking Business in preparation for our entry into the financial services. In overseas markets, we expect our Shanghai subsidiary company in China to expand its network to over 1,000 stores, and to turn a profit in FY2018 just as our Dalian subsidiary did in FY2017. In all areas, Lawson is ready to tackle new challenges.

FY2018 profit and dividend estimates

On the profit front, we expect consolidated net profit will rebound in fiscal 2018 when compared to the previous year’s extraordinary losses and other factors, to report a 4.4% year-on-year rise to 28.0 billion yen. We estimate consolidated operating profit will decline 8.8% year on year to 60.0 billion yen. While we forecast same store sales will rise 1.0% and the gross profit margin will improve by 0.1 point on the back of stronger evening and nighttime sales, we do also intend to continue our investment growth in next-generation systems and the financial services.

Our FY2017 dividend payment remains unchanged from the beginning of the period at 255 yen per share. We intend to offer a similar 255 yen per share dividend for FY2018 to ensure a continued stable shareholder return.

Finally, I would like to take this opportunity to thank all of our shareholders and investors for their continued support and understanding of our management strategy and our committed corporate philosophy for “Creating Happiness and Harmony in Our Communities”.