Q&As at the Financial Results Briefing for FY2021 of Lawson, Inc.
DateApril 12, 2022, Tuesday, 10:00–11:30

Attendees

Sadanobu Takemasu, President and CEO, Representative Director,
Chairman of the Board
Satoshi Nakaniwa, Member of the Board, Executive Managing Officer,
Chief Financial Officer
Tomoki Takanishi, Senior Vice President, Division Director of Financial
Administration Division
Kino Arai, General Manager, Investor Relations Dept.

Q：Please tell us about outcome of the store renovation in the pursuit of the ideal store format
PJ. Additionally, how does the company deal with stores not subject to the renovation?
A：For 1,000 stores subject to the preceding store renovation, there was the effect of pushing up
daily sales two to three months after the renovation and exceeding the estimation of +5%.
There is a variation in the effect according to characteristics of the location. The renovation
was concentratedly conducted in about 2,000 stores in January and February, but its effecthas not yet fully emerged. The company understands the causes and issues, and it will deal
with the issues for each store. For stores realizing their own potential without renovation, therenovation will not be conducted. To attract customers, the company will strengthen marketingpromotions, in addition to the ideal renovation and the product renewal that have been
implemented.

Q：What outcome did the introduction of the Kinki Company and the Hokkaido Company create?
Will the company system be expanded to other areas?
A：Recently, Kinki Company and Hokkaido Company have achieved better performance over otherareas. In the system, the company president is engaged in management near the frontline,
which makes franchisees pull up their socks via supervisors. The company expects that it canfurther create outcomes by circulating PDCA, including the way to offer community-based
products and generate sales through marketing measures. The company system will be
introduced nationwide in the next fiscal year.

Q：I would like to confirm whether the business portfolio strategy shifted to the growth driven by
consolidation management of LAWSON and Seijo Ishii, the overseas business andentertainment-related business. Additionally, please tell us about the view of the capitalalliance and IPO of the overseas business (China) and Seijo Ishii.
A：The company has made the Chinese business profitable and aims to increase the number ofstores in the business to 10,000 by 2025. The business has entered into the phase where thecapital policy should be examined, taking into account a variety of options that include apartner strategy and IPO to achieve sustainable growth and accelerate growth in China. Thecompany examines a variety of options for the further growth of Seijo Ishii that includes
fundraising by IPO for industry consolidation, expansion overseas, and new deployment of theEC business. It also examines whether it should develop the entertainment-related businessas a wholly owning shareholder or increase earnings opportunities through industry
consolidation. Additionally, it examines the growth strategy from a variety of options that
include the return to shareholders of the parent company Lawson and reinvestment infinancing, data, and domestic CVS of funds generated from the above businesses. No capital
policy is reflected in the plan for the fiscal year because no capital policy was determined forthe fiscal year.

Q：Please tell us about the assumptions for the existing store sales growth of +3% YoY in theunconsolidated plan.
A：For the first half of the fiscal year, the effect of the store renovation will be insufficiently
reflected because the renovation was concentratedly conducted in January and February. AfterMay when the product lineup will be completed, the company will aggressively implement
marketing measures.

Q：Please tell us about the effect of introduction and prospect of products of MUJI.
A：In stores subject to test marketing, there is the effect of about a 2% to 5% increase. Amongthese stores, those with no MUJI store in the neighborhood enjoy a larger effect. The future
deployment is under consideration.

Q：How do you expect the introduction of the company system to create an outcome?
A：The company would like to enable the frontline to make decisions optimal to the frontline. It
will also advance localization and increase the percentage of area-based products. Trimming
down the headquarters is designed to build a system that contributes to the frontline, including
the acceleration of decision-making.

Q：Gross margin ratio is set at +0.4 pt in the plan. Will the company increase the ratio with theproduct mix? Please tell us about the number of stores introducing the sellout operation andits effect and prospects.
A：The company will increase the gross margin ratio by improving the product mix, including
Chubo products and counter service fast foods, and the pricing with customers satisfied withthe value. The sellout operation was trialed at 65 stores in Tohoku. The company verifies thetiming of the sellout and width of the discount for maximizing gross profit using AI. Thecompany strives to introduce the operation during fiscal 2023.

Q：Please tell us about the advantage of convenience stores and views on the future businessscale of food delivery services.
A：Convenience stores can respond to changes more quickly that other industries because of theirarea of about 30 tsubo, or 100 ㎡. Early introduction of the Uber Eats service and simultaneous
deployment of frozen foods are also due to the ability to respond to changes and the quicknessof the response. The company operates ghost restaurants, or delivery-only restaurants, which
utilize the strength of the company’s instore kitchen, setting the goal of the number of storesat about 1,000 and the benchmark of 20,000 yen per brand. The delivery services that include
Uber Eats are offered by about 3,000 stores. If it were offered by 5,000 stores, there would
be service-offering stores in every area.

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