Lawson, Inc. has pursued business activities that seek to give concrete shape to our corporate philosophy, “Creating Happiness and Harmony in Our Communities”. In the twelve months through February 2021, the COVID-19 virus has spread around the world, greatly affecting people’s lives resulting in the declaration of two state of emergencies in Japan and the stagnation of economic and social activity. We have witnessed changes in people’s lifestyles as teleworking becomes the norm and changes in consumers’ purchasing behavior. Our business has been impacted by these changes and the Lawson Group has seen sales decline, but we continue to pursue initiatives to respond these changes by strengthening products ranges designed to satisfy new normal consumption patterns such as stay-at-home demand and bulk buying, preventing product shortages, and expanding home delivery services.
COVID-19 did have a considerable impact on our domestic convenience store sales. However, customers appreciated our initiatives to expand our ranges of fresh vegetables, frozen foods, and daily foods in response to the rising number of people choosing to refrain from going out and cook at home and also our efforts to further strengthen our already renowned desserts and lunchbox meals cooked instore. At the same time, we also focused our management efforts on franchise store profits by providing business support to franchise stores that had experienced a decline in sales and broader support to proactively strengthening product lineups for those suffering significant reductions in sales and support actively strengthening product lineups. In terms of store numbers, in FY2020, Lawson opened 373 stores and closed 341 stores, resulting in a net increase of 32 stores and a total number of 14,476 convenience stores in Japan at the end of February 2021. Internationally, we pressed ahead with new store openings, resulting in a net increase of 703 stores and a total of 3,621 international stores at the end of February 2021.
As a result of the above factors, both consolidated chain-store sales and operating revenue declined year on year in FY2020, with consolidated chain-store sales totaling 2.3497 trillion yen (-6.3% year on year) and consolidated operating revenue totaling 666.0 billion yen (-8.8%). Meanwhile, existing-store sales in Japan declined by 7.3% year on year in FY2021.

On the profit front, the decline in sales from the Japan convenience store operation resulted in a similar decline in profits. In contrast, Mainland China, which sits at the heart of our international operation, quickly shook off the COVID-19 virus to generate a recovery in same-store sales and to post its first ever operating income for the full year. Seijo Ishii reported an increase in profit on the back of buoyant supermarket demand and strong sales of original Seijo Ishii fresh deli items. Meanwhile, our entertainment-related business reported a better-than-expected performance thanks to rising ticket sales to reopened leisure facilities and sports games and our efforts to expand ticket handling for events broadcast live online, as well as a firm e-commerce operation which had strengthened its product range to satisfy stay-at-home demand, and a recovery in cinema goers wanting to see the popular film released in October.

On the cost front, we continue to work to reduce food waste, streamline sales promotions by using digital advertising, reduce travel and transportation expenses, and cut meeting management costs. As a result, consolidated operating income for FY2020 totaled 40.8 billion yen (-35.1%), consolidated ordinary income totaled 37.6 billion yen (-33.3%), and consolidated net income totaled 8.6 billion yen (-56.8%).

In FY2020, we also launched our “Whew!” Kindness Project designed to help solve environmental issues. In April 2020, we endorsed the Task Force on Climate-related Financial Disclosures (TCFD) and have been analyzing climate-related risks and opportunities on order to better respond to increasingly serious climate-change issues, gaining a clear understanding of the impact on our business strategy and considering appropriate measures, as well as proactively disclosing pertinent information. We have managed to reduce the number of plastic bags used at our cash registered by 75%. We have also continued to work on reducing food waste and cutting plastic product packaging and consequently CO2 emissions from stores by launching lunchboxes and cooked noodles in paper cartons and switching to paper cups for our iced Machi cafe,

■The Ideal Lawson Company: Challenge 2025

2025 will mark Lawson’s 25th year in business. We have been using that milestone to continue to think about the ideal form the Lawson Group should take and how we can best contribute to society through our business. We have encapsulated those ideas in our recently-announced Challenge 2025 medium-term business vision.
Our business environment is changing daily due to the advances in IT, information and communication, and various other technologies and changes in everyday lifestyles. Those changes have also been accelerated by the spread of the COVID-19 pandemic last year. To respond to this emerging new normal, we have been working together as a strong, united group to better anticipate new needs and firmly promote the creation of “new hubs of refreshment in every community” that offer a new kind of convenience. In FY2020, we launched the Lawson Group Transformation Executive Committee to serve as the foundation of Challenge 2025. As chairman of the committee, I intend to determine and implement the directives required to ensure Lawson can evolve into the ideal, No.1 recommended brand by 2025.

Challenge 2025
●Become every customer’s No.1 recommended brand
●Pursue ESG-driven management
●Performance indicators: EPS 500 yen or higher, ROE 15% or higher

■Key Action Planned for FY2021 (Year to February 2022)

In FY2021, the first year of Challenge 2025, we will step up our drive to respond to new normal consumption styles and needs with regards to products. Keeping up the good work from last year, we intend to further refine our pillar food products such as the desserts and lunchboxes that have been Lawson’s renowned strengths, while strengthening our fresh vegetables, frozen foods, and daily goods ranges. In particular we plan to expand the number of stores with Machikado Kitchens for instore cooking, which has enjoyed growing demand during the COVID-19 pandemic. We will also move ahead with the renovation of displays and introduction of new fixtures at existing-stores to make these products more accessible to our customers. We will also strive to optimize our supply chain and uniformly manage and effectively utilize Group date in order to achieve a lean transformation of Groupwide operations.

Regarding our international business, our Chinese operation moved into the black in terms of operating income in FY2020, and our network in China topped 3,000 stores making it one of our largest operations and illustrating how our business development in overseas markets has entered a new stage. We intend to continue expanding our international operations centered around China. In the entertainment business, where the impact of COVID-19 was most pronounced last year, we intend to focus on expanding new fields, such as ticket handling for live online events, as well as maintain our conventional activities. As for Seijo Ishii, we will continue to service vigorous supermarket demand, expand business in growth areas such as e-commerce and home delivery, and seek to further strengthen our business foundation. Regarding our financial business, we will increase alliances with regional financial institutions, expand the number of affiliated payment operators, and expand our function and service offering.

On March 1, 2021, we created the new position of chief sustainability officer (CSO) to lead increasingly important SDGs initiatives and I have decided to fill this position myself. I intend to further strengthen our sustainability initiatives under this new structure.

■FY2021 performance and dividend estimates

Looking at our business estimates for FY2021, we forecast existing-store sales from LAWSON business will increase by 5.0% year on year, and we are targeting a gross profit margin of 31.0%. We plan to invest in a major transformation of our store displays to better serve new normal needs, and so we estimate consolidated operating income for FY2021 of 50.0 billion yen (+22.3%) and consolidated net income of 13.5 billion yen (+55.4%). We intend to offer a dividend of 150 yen per share in FY2021.

Finally, I would like to take this opportunity to thank all 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.”