During the nine months from March to November 2018, Lawson, Inc. has pursued business activities that give concrete shape to our corporate philosophy; “Creating Happiness and Harmony in Our Communities”.

FY2018 marks the third and final year of our “1000-Day Action Plan” project, so we spent the first nine months continuing to formulate a next-generation Lawson convenience-store model to ensure sustainable growth, and reform our chain-store management with such measures as changing product order cut-off and store delivery times to provide stronger support for everyday living, especially evening and nighttime convenience-store demand.

Looking at store numbers, the Lawson Group opened 818 stores and closed 286 stores in the first nine months, resulting in a net increase of 532 stores and a total number of 14,524 convenience stores in Japan at the end of November 2018. Store numbers overseas increased by a net 452 to 2,048 stores at the end of November 2018, due largely to an expansion of store numbers in China. These net store increases helped generate year-on-year gains in both consolidated net sales of convenience stores and operating revenue, with consolidated net sales of convenience stores reaching 1,833.9 billion yen (+6.5% year on year) and operating revenue expanding to 527.6 billion yen (+6.8%) in the first nine months of FY2018.

Meanwhile, existing-store sales during the nine months of FY2018 in Japan (excluding ticket and gift-card sales etc.) declined by a marginal 0.6% year on year on the back of increasingly severe competition and falling customer numbers. However, average customer spend increased year on year as our efforts to strengthen evening and nighttime food ranges started to bear fruit, and our expanded food ranges designed to strengthen our support of everyday living helped generate strong sales of both daily delicatessen and frozen food items.

On the profit front, operating profit in the nine months of FY2018 declined 11.9% year on year to 47.8 billion yen on the back of: increased leading investment in next-generation systems aimed at securing sustainable growth; recorded expenses relating to the launch of Lawson Bank services for customers on October 15, and; higher franchisee support costs resulting mainly from our ongoing commitment to shoulder a portion of franchisee disposal losses.

Key Actions Taken in the Third Quarter of FY2018

・Rice-related products and cooked noodle categories: Our new, improved Onigiri-ya rice balls sold well. Our hit “Akuma-no-onigiri (= rice ball too delicious to stop eating)” and our new boxed meal “Nabeshime”, hotpot series launched in November, which enable individuals to enjoy a whole hotpot, also contributed to strong category sales. Sales of hot noodle items increased including “Konsin-no-ippai (= noodle bowl using new soup and noodle specifically developed)”, which can be heated in the microwave.

・In the dessert category, we renewed our long-running hit “Uchi Cafe Premium Roll Cake” in October, and our limited sales of the cream used to make the premium roll cake attracted customers. We launched the first hot chocolate drink in our “Uchi Cafe SWEETSxGODIVA” collaborative series with the exclusive GODIVA confectionery manufacturer, along with a heat-and-eat chocolate fondant. Both products proved popular mainly with female customers.

・Since launching in March, we have expanded our Lawson Fresh Pick service (“Loppick”) to approximately 1,600 Lawson stores in Tokyo and Kanagawa prefecture. This service enables customers to order fresh produce and meal kits via smart phone in the morning and pick up their order from a Lawson store in the evening. The service continues to earn strong praise from working people who don’t have the time or opportunity to go shopping themselves.

・Lawson began introducing new POS cash registers with automatic change dispensers in earnest in June to improve in-store cash management. By the end of November 2018, we had installed the new registers in approximately 12,800 stores. In November, we launched Japan’s first joint points service, which enables customers to collect and use Ponta points for payment using Apple Pay on an iPhone or Apple Watch at any Lawson store in Japan. These moves, along with the last year’s introduction of tablet devices, are designed to further boost store efficiency and improve productivity in times of increasingly tight labor resources.

・Lawson Bank, Inc. (Lawson Bank) began offering retail banking services such as bank accounts, internet banking and online payment services to individual customers from October 15. We also installed ATM units in locations outside Lawson stores such the New Chitose Airport and Tokyo Metro stations. Going forward, the Lawson Group intends to use the addition of Lawson Bank to offer a broad range of financial services that are essential to community living.

In the fourth and final quarter of FY2018 from December 2018 through February 2019, we have been working to strengthen support offered to franchise stores, and also strengthen the appeal of our products, our store displays and our new store openings to ensure we remain an essential part of our communities. We continue to create better services designed to satisfy the needs of evening and nighttime customers by reforming our entire approach to supply chain management. With Lawson Bank now up and running, we are seeking to offer a broad range of essential financial services for community living. We are still working towards achieving our full-year operating profit target, which remains unchanged at 60.0 billion yen.

We have determined that the business year through February 2019 will be a period for investing in our future, and consolidated operating profit is expected to decline as a result. However, we are committed to actively pursuing positive measures to establish a solid operational base that can support future sustainable growth, such as building next-generation systems to improve productivity, and pursuing new initiatives and services for our finance operation. As we move into the new year, I call on all our shareholders and investors to support us in this forward-looking, long-term management strategy.