During the three months from March to May 2019, Lawson, Inc. has pursued business activities that give concrete shape to our corporate philosophy; “Creating Happiness and Harmony in Our Communities”. Today, in response to severe issues such as tight labor supply and rising personnel costs caused by a low birth rate and ageing society and other changes in our social environment, we are firmly focused on pursuing sustainable growth together with our franchise stores by further strengthening franchise-store support and our stronger joint relationships.

Looking at store numbers, in the first quarter, Lawson opened 130 stores and closed 108 stores resulting in a net increase of 22 stores and a total number of 14,681 convenience stores in Japan at the end of May 2019. Internationally, we continued to expand store numbers in China, increasing Lawson’s international network by a net 152 to 2,362 stores at the end of May 2019. The net increase in store numbers inside and outside Japan helped generate year-on-year gains in both consolidated net sales of convenience stores and gross operating revenue, with consolidated net sales of convenience stores reaching 623.8 billion yen (+5.6% year on year) and consolidated gross operating revenue expanding to 178.8 billion yen (+4.9%) in the first quarter.

In addition, first-quarter existing-store sales in Japan (excluding ticket and gift-card sales etc.) increased by 1.3% thanks to a successful strategy to strengthen evening and nighttime product ranges, and a number of hit products in our pillar dessert and rice ball items which were generated by our determined development of ultimate delicious-tasting products.

On the profit front, first-quarter consolidated operating profit expanded by 12.4% to 14.2 billion yen on the back of the above-mentioned positive factors, as well as strong contributions from our Seijo Ishii upmarket supermarket business, whose firm ready-made meals or delicatessen helped drive overall sales higher, and our entertainment-related business, which managed a number of large-scale events over the three-month period.

Key Actions Taken in the First Quarter from March to May 2019

Looking first at individual product categories: In the dessert category, the launch of our new “Baschee” Basque-style cheesecake in March became a huge hit, attracting new customers to our stores, and driving overall Uchi Cafe dessert sales higher. Rice products category sales rose year on year thanks to strong sales of rice balls such our “Akuma-no-onigiri (= rice ball too delicious to stop eating)” series, which continued to appeal to a broader range of customers, and our newly added “Kinshari (=high rank rice)” rice ball series. “Machi-no-pan”, our new bakery series reflects our commitment to high-quality ingredients and manufacturing processes, and the pursuit of perfect food textures and delicious taste. The constant stream of new items in this series, such as new “French toast using baguette” and “Cheese-rich boule”, proved popular with customers and helped boost sales.

On April 25, 2019, Lawson announced its assessment of measures to date and listed future initiatives as part of its action plan for strengthening franchise-store support and generally deepening our relationship with our franchise stores. In addition to ongoing franchise-support measures, we also started working earnestly in the first quarter on labor- and manpower-saving measures to help alleviate the impact of extremely tight labor conditions on franchise-store operations. We are currently adding new multi-store management functions and upgrading instore computer systems for better information processing to help improve administrative efficiency at individual stores.

In terms of the second quarter from June to August 2019, we will be working to expand the introduction of self-cash register and smartphone cash register facilities as a way of using digital technologies to reduce instore manpower needs. We are also setting up new consulting services and other facilities as a means of strengthening communication with franchise stores.

On June 11, we launched the Another Choice program at LAWSON stores in Ehime and Okinawa prefectures together with our customers. This community-driven initiative to both reduce food loss and donate food to children in need. Under the program, Lawson awards Ponta members and d point card members 5 points for every 100 yen spent (excluding taxes) on purchasing products approaching their sell-by dates, and donates 5% of the total amount to initiatives that support children as precious builders of future generations. Depending on the results of these pilot projects, we will consider expanding the system to stores nationwide.

Over the full business year, we will be introducing measures to make store operations more efficient investing in labor-saving support as part of our strategy to address the key management issue of tight labor supply in close cooperation with franchise stores. As a result, we forecast full-year consolidated operating profit will remain flat in FY2019 at 60.8 billion yen. We have also decided to support franchise stores by proactively replacing low-profit stores with more profitable stores. We aim to achieve this profit plan in FY2019 and create a solid basis upon which to build future growth. I ask for the kind understanding and support of all our stakeholders in this carefully planned effort to build a strong and sustainable future for our business.