In FY2021, we experienced repeated restrictions and relaxations of rules on social activities designed to stem the spread of COVID-19 in the form of intermittent announcements of states of emergency or the application of pre-state of emergency measures. Once into 2022, the rapid spread of the omicron variant further discouraged free movement of people and our business environment continued to suffer from restricted social activities.

Against this background, Lawson has been striving to achieve our Challenge 2025 medium-term vision formulated to mark our 50th anniversary. Under the guidance of the Lawson Group Sweeping Transformation Executive Committee established in September 2020, we have been channeling growth investment into our Japanese convenience store business in order to renovate stores and refresh our product mixes and help address the changes in our business environment. We have also been working to solve medium- to long-term issues, secure new revenue-generating opportunities, and improve job satisfaction and enthusiasm in pursuit of sustainable growth across the Lawson Group.

In the Japanese convenience store business, we expanded our range of frozen foods and daily items that people use on a regular basis in response to changing customer lifestyles in the current with-Covid times. We pursued tailored renovations of 4,305 stores in FY2021 to suit local business conditions and better serve customer demand. In addition to the store renovations, we introduced more Machikado Chubo in-store kitchen services into stores in FY2021, bringing the total number of stores with Machikado Chubo kitchens to 8,359 at the end of February 2022.

We also continued to steadily increase the number of stores offering food delivery services, which are in high demand. By the end of February 2022, 2,903 stores in 45 prefectures were able to offer food deliveries through a total of six delivery services, including Uber Eats. Furthermore, the number of stores asking Uber Eats to also handle the delivery of over-the-counter drugs rose to 71 stores in 14 prefectures.

Franchise store profits increased year on year thanks to our efforts to boost sales as well as our continuous drive to improve franchise profits by streamlining store operations and reducing costs.

In terms of store numbers, Lawson opened 483 stores and closed 303 stores in FY2021, resulting in a net increase of 180 stores and a total number of 14,656 convenience stores in Japan at the end of February 2022. The number of international stores increased by a net 1,241 stores to 4,862 at the end of February 2022 as a result of new store openings.

As a result of these efforts, consolidated net sales from convenience stores totaled 2.4427 trillion yen (+4.0% year on year) and consolidated gross operating revenue totaled 698.3 billion yen (+4.9%) in FY2021. Meanwhile, existing-store sales in Japan increased by 1.1% year on year over the twelve-month period.

On the profit front, sales from the Japanese convenience store business increased year on year thanks to our efforts to renovate stores and renewal products and our determination to channeled growth investment into future-oriented store renovation. The increased costs associated with store renovations, among other factors, resulted in a decline in year-on-year profits for the Japanese convenience store operation. Meanwhile, profits from our Seijo Ishii business increased as the operation successfully captured stay-home demand, and sales of original own deli and dessert items manufactured in Seijo Ishii’s in-house Central Kitchen continued to prove strong. Our entertainment-related business reported higher profits as ticket-handling volumes increased following a rise in the number of concerts and other events held and successful efforts to increase the number of events. The number of cinemagoers also continued to recover at our cinema complexes. Our financial services business generated higher profits as ATM usage increased on the back of an expansion in affiliated financial institutions and services offered. As for our overseas business, profit increased following the expansion of our store network in China. At the end of February 2022, the number of stores in China had increased by 1,216 year on year to 4,560. As a result of the above developments, consolidated operating income totaled 47.0 billion yen (+15.2%) in FY2021, while consolidated ordinary income totaled 47.5 billion yen (+26.5%), and consolidated net income increased to 17.9 billion yen (+106.0%).

■FY2022 Initiatives

In FY2022 we aim to develop our “community-based + individual customer and individual store-focused” strategic concept to help us deliver new conveniences for daily local-community living and create“New hubs of refreshment in every community” that will earn even greater customer support. To achieve this goal, we started introducing a new area company system from FY2022. In FY2022, we intend to establish Hokkaido Company and Kinki Company and lay the foundations for the nationwide introduction of a full area company system in FY2023. Our ultimate aim is to strengthen our presence in individual areas by establishing a small head office and powerful on-the-ground outlets.

The Lawson Group Sweeping Transformation Executive Committee will restructure some of our projects and further accelerate the pace of change in priority areas, including our operating companies and the promotion of SDGs. Continuing on from FY2021, we intend to pursue further growth investment and improve daily sales by expanding the number of ideally renovated stores to a total of 8,000 and the number of stores with Machikado Chubo in-store kitchens to 9,000 by the end of FY2022. In the medium to long-term, we are seeking to utilize Group data to reform of our earning structures.

As for our operating companies, we aim to expand the scale of our overseas business by extending our store network primarily in China. At our entertainment-related business, we will focus on strengthening operations to suit new normal conditions and also focus on pursuing and maximizing Group synergies. We will aim to further strengthen the management base of our Seijo Ishii business by launching a new Central Kitchen plant to provide high-quality, high value-added products that will further enhance our brand value. In our financial services business, we will work hard to develop further partnerships with regional financial institutions, promote the expansion and greater use of ATM services, and expand account charging opportunities.

As part of our efforts to promote the SDGs, we will strive to reduce the volume of plastic containers to comply with Japan’s new Act on Promotion of Resource Circulation for Plastics, reduce CO2 emissions and reduce food waste. We also intend to pursue our environmentally friendly policies more earnestly than ever before by introducing Green Lawson environment-conscious stores and using solar-powered renewable energy in stores.

In order to successfully achieve our Challenge 2025 program, we intend to implement initiatives designed to promote the growth of the whole Lawson Group and maximize the value of the Lawson brand.

■FY2022 Full-year Plan and Dividend

With regard to our full-year plan for FY2022, we expect to achieve a 3.0% year-on-year increase in existing-store sales through the Lawson Group Sweeping Transformation Executive Committee activities. We also expect to achieve a gross profit margin of 31.1%, consolidated operating income of 53.0 billion yen (+12.5%), and consolidated net income of 22.0 billion yen (+22.9%). We are scheduled to pay a dividend of 150 yen per share in FY2022.

We ask all our shareholders and investors for their understanding and support of our management strategy for the business year ahead, and beyond.