Total sales rose 0.8% year-on-year, to 127,314 million yen. Existing store sales declined 4.2%. Average daily sales per store were 510,000 yen, while the average amount spent per customer was 588 yen, up 0.4%. The average number of customers per store per day slipped 4.5%, to 865. The percentage decline in existing store markups was less than that of existing store sales, owing to strong fast food sales and efforts to boost markups.

Inclement weather in the first half of July negatively impacted sales, particularly of seasonal products. Although sales in Hokkaido and the Kinki region were lackluster, sales in the Kanto and Chubu regions were relatively firm.

An increase in the number of cool days hindered sales of cold noodles, soft drinks and ice cream.

Sales in the rice dishes category fell below the July 2004 level, but continued to exceed average category sales. Moreover, the decline in year-on-year sales did not mark a significant divergence from the upward trend in this category that had continued until June 2005. Sales of eel boxed lunches sold to coincide with the hottest part of summer rose approximately 50%.

Sales in the fast food category maintained double-digit growth, supported by the launch of Karaage-kun Habanero, a spicy version of Karaage-kun crispy Japanese-style fried chicken. The 2005 versions of LAWSON's oden (a Japanese hotpot dish) and Chinese steamed buns will come on sale in August 2005.

The launch of several new products contributed to brisk sales of salads and delicatessen items.

Sales of daily-use items remained steady. Health drink sales, which performed well last year owing to particularly hot weather, were up year-on-year, thanks to an expanded selection of drinks with new health benefits.

As of July 31, 2005, in addition to our nationwide network of regular LAWSON stores, we had 30 NATURAL LAWSON stores and eight STORE100 stores. Data for July represents the results of 8,155 stores. This number does not include STORE100-format stores.

LAWSON will announce its interim earnings for the year ending February 28, 2006, on October 12, 2005.