Summary of Results for FY2010
LAWSON, INC.
April 15, 2011

Copyright (c) 2011 LAWSON, Inc. All rights reserved.

1

Financial Results for FY2010

Yoshiyuki Yahagi
Chief Financial Officer

Copyright (c) 2011 LAWSON, Inc. All rights reserved.

2

FY2010 Earning Summary（Consolidated：Billions of yen）

Net sales of all stores
Operating profit
Operating profit ratio
Recurring profit
Net profit
ROEEPS（Yen）
Dividend payout ratio
Projected dividend per share(Yen）
Total no. of stores in Japan

FY2008Actual
1,558.7
49.1
3.2%
48.7
23.8
12.5%
240.1066.6%
1609,527

FY2009Actual
1,666.1
50.2
3.0%
49.4
12.5
6.5%
126.67126.3%
160
9,761

Actual
1,682.8
55.5
3.3%
54.5
25.3
12.8%
254.61
66.8%
170
9,994

FY2010
YoY
101.0%
110.5%
0.3%P
110.4%
202.1%
6.3%P
201.0%▲59.5%
10233

vs. Plan

99.9%
104.8%
0.2%P
105.8%
109.4%
109.6%
23

Notes: Net profit and EPS for FY2009 have been corrected because of prior-year'sfinancial adjustments of LAWSON ENTERMEDIA.
Results for FY2009 include the results of Ninety-nine Plus Inc. for the period from January 2009 to February 2010.
Percentages against plan are based on the results for 3Q of FY2010.

 Consolidated operating profit：Double digits growth （Best record in company’s history）
Existing store sales YOY exceeded the initial plan thanks to big hits in desserts categories.
Efforts in reducing SG&A continued and OP exceeded the plan (modified at announcement of FY2010-3Q).

 Consolidated net profit: Significant increase （Best record in company’s history）
Regardless of extraordinary loss on disposal of training facility, IT systems at Ninety-nine Plus Inc. ,repercussion of last year’s LEM misconduct-related loss of 13 billion yen led to significant increase in NP.
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

3

Existing Stores（Non-Consolidated）
110.0%

1.5%
1.0%

105.0%
0.5%
100.0%

0.0%
-0.5%

95.0%
-1.0%
90.0%

-1.5%
1H

2H
FY20071H

2H
FY2008Gross profit margin ratio(Difference, Right）
Existing stores sales（YoY, Left）

1H

2H
FY20091H

Reference

FY2010Existing stores YOY
Gross profit: 101.4%
Sales: 100.8%
No. of customers: 100.4%
Amount spentper customer: 100.4%

2H
FY2010Gross profit（YoY, Left）

 Gross profit margin excl. cigarette improved 0.5% point yoy because of efforts in obtaining better
value-added raw materials and projection ordering system.
 Amount spent per customer increased by the effects of cigarette tax hike; number of customers
also increased by the small repercussion of the cigarette tax hike.
 Existing store sales and gross profit yoy attained the plan applying results from analyzing
purchasing data of Ponta card holders to new product development.
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

4

Store Opening（Non-Consolidated）（Opening／Closure／Net Store increase）（Daily sales per new store: ¥ thousand）

Net store increase （Left）
Store opening (Left)Store Closure （Left）
Daily sales per new store （Right）

540

600

380

500

220

400

60０

300-100

200-260

100-420

0
FY2007

FY2008FY2009FY2010 As a consequence of more openings and 18 less closures than the planned, net store increase
exceeded the plan, resulted in 147 stores.
 Seamless unification of store development and operation contributed to increase in daily sales atnew store to 506 thousand yen (42 thousand yen more than the level of FY2009).
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

5Key Components of SG&A Expenses
FY2010FY2009(Billions of yen)
Actual Actual YoY
Selling, general and administrative expenses
179.4 179.9
0.4

FY2011
Forecast
Slight increase＜Major Strategic Expenses＞

Non- Personnel costs
consoIT-related costs
lidated

36.9
13.6

35.7
14.7

▲ 1.2 Down approx. 5%
Up approx. 5%
1.0

11.2

9.0

▲ 2.1

Up approx. 10%

243.1

242.6

▲ 0.5

Up approx. 5%(Hardware leasing, software amortzation,
maintenance, etc.）

Consolidated SG&A expenses

Differences from FY2009

Differences from the PlanPersonnel costs
IT-related costs

Increase from the amortization of PRiSM-related
software installation of the previous year

Advertising and promotional expenses

Selective promotion based on ROI and efficient
shopping points programs

Copyright (c) 2011 LAWSON, Inc. All rights reserved.

Consolidated

Consolidated

 Ninety-nine Plus
Decreased due to repercussion from 14 months resultsfor FY2009 which aggregated the results of the period
from January 2009 to February 2010.

Nonconsolidated

Nonconsolidated

Store crew expenses declined by reduction in numberof company-operated stores.

Minus 0.8 billion yen
IT-related costs
Minus 0.5 billion yen due to reduction in PRiSM-relatedrenovation costs

Advertising and promotional expenses
Minus 0.7 billion yen as a result of unused promotion
because of unexpected sales increase

Minus 0.8 billion yen Same as the above reasons for the non-consolidated
basis6

Earnings of Major Subsidiaries and Affiliates（Billions of yen）

FY2010<Operating Profit of Major Subsidiaries>
Ninety-nine Plus Inc.
LAWSON ENTERMEDIA, INC.
HMV JAPAN K.K.
LAWSON ATM Networks, Inc.
Cross Ocean Media, Inc.

FiscalYear EndLAWSON'sShares

Feb.
Feb.
Apr.
Feb.
Feb.

100.0%
100.0%
100.0%
44.0%
42.0%<Operating Profit of Equity-method Affiliates>
LAWSON Okinawa, Inc.
Feb.
49.0%
SHANGHAI HUALIAN LAWSON CO.,
Dec.LTD. 49.0%

FY2011

Actual

YoY

1.77
1.11
0.19
3.15
▲ 0.36▲0.39 *0.01
0.71-FY20100.60
0.01

Forecast
2.800.60▲0.20
3.00▲ 0.100.490.01* Compared with the operating profit from January 2009 to February 2010, which was included in LAWSON's consolidated
results for that fiscal year.

Ninety-nine Plus Inc.

Delayed new store openings and unsuccessful existing store sales, resulted inOP reduction and lower earnings than the planned.

LAWSON ENTERMEDIA, INC.

OP increased slightly above the planned by efforts in reduction of IT-related
SG&A.

HMV Japan K.K.

As a result of closing unprofitable stores, OP keeps positive forthree months of the period from November 2010 to January 2011.

LAWSON ATM Networks, Inc.

OP increased by growing number of ATM installation and efforts in
SG&A reduction

Copyright (c) 2011 LAWSON, Inc. All rights reserved.

7

FY2010 Balance Sheet and Cash Flows (Consolidated)
End of Feb. 2011

Total current assets（Cash and deposits）（Marketable securities）（Accounts receivable）
Total noncurrent assets
Property, plant and equipment

Intangible assets
Investments and other assets（Long-terms loans receivable）（Guatantee deposits）

Total Assets

145.0
74.8
2.9
29.2
331.0
158.8
36.0
136.0
31.8
81.6
476.0

YoY
12.8
10.7
0.4
2.8
15.0
13.5
1.6
▲ 0.1
2.1
▲ 1.527.9（Billions of yen）
End of Feb. 2011
YoY
Total current liabilities（Accounts payable-trade）（Deposits payable）
Total noncurrent liabilities(Long-term guarantee deposits）

Net Assets（Common stock）（Retained earnings）
Liabilities, and net assets

192.5
81.3
62.3
74.9
37.1
208.4
58.5
99.6
476.0

8.0
8.2
▲ 3.5
9.4
▲ 1.5
10.3
－5.4
27.9

Impact of new lease accounting standard
Fixed assets: +13 billion yen
Current/long-term liabilities: +12.1billion yen（Billions of yen）

Cash flows from operating activities
Cash flows from investing activities

Free cash flows
Cash flows from financing activities(Reference) Cash and deposits

FY2008 FY2009 FY2010
51.7
40.6
72.2
▲ 15.6 ▲ 42.5 ▲ 30.536.0▲ 1.941.6▲ 14.9 ▲ 27.2 ▲ 28.7
82.4

Copyright (c) 2011 LAWSON, Inc. All rights reserved.

64.0

74.88

FY2011 Forecast (Consolidated)
FY2011 Forecast（Billions of yen）
(a) Before Quake (b) After Quake (b) －(a)YoY
Net sales of all stores
1,682.8
1,790.0
1,768.0 ▲ 22.0
105.1%
Operating profit
55.5
61.0
57.5 ▲ 3.5
103.5%
Operating profit ratio
3.3%
3.4%
3.3% ▲ 0.1%
0.0%P
Recurring profit
54.5
58.9
55.4 ▲ 3.5
101.5%Net profit
25.3
25.3
19.8 ▲ 5.5
78.0%
ROE
12.8%
9.7%
▲3.1%PEPS（Yen）
254.61
253.33198.26 ▲ 55.07
77.9%
Dividend payout ratio
66.8%
88.3%
21.5%P
Project dividend per share (Yen)170
175
5FY2010

9,994

10,324

10,324

101.4%Net sales at existing stores (YoY) 100.8%
Gross profit margin ratio
30.6%

102.5%
103.5%
30.3%

101.8%
102.5%
30.4%

Total no. of stores in Japan

0330（Non-Consolidated）
Gross profit at existing stores (YoY)

0.4%P▲ 0.7%P
1.7%P▲ 1.0%P
0.1%P ▲0.2%P

 Aim to OP increase by product development and penetration of PRiSM-based orders
 Increase number of customers by better merchandise assortments matched to each location
 Improve gross profit margin (except cigarettes) by 0.3% point (after offsetting 0.5% point negative impact of cigarettes
category)
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

9Our Response to Quake Damages
Right After the Quake
TohokuClosed/under recovery: 358 stores

As of April 14, 2011
Under recovery: 32 stores
Closed: 20 stores

StoresManufacture& SupplyChain※
Under recovery: 1 store

Ibaraki

Closed/under recovery: 29 storesTohokuVendor factories: 5 suspended operation
Distribution centers : 11 suspended
operation

Vendor factories: 4 recovered
Distribution centers : 10 recovered

Kanto

Vendor factories: 1 suspended operation
Distribution centers : 2 damaged

Vendor factories: all recovered
Distribution centers : all recovered

Other Initiatives Headquarters dispatched emergency rescue team to support early recovery of store
operation
 Delivered relief supplies (Since March 13）
 Efficient use of electricity※ In addition, three stores in Chiba and Tokyo are temporarily closed.
※ In addition, one store in Tohoku and another store in Ibaraki of Ninety-nine Plus Inc. are under recovery.
※ 25 stores of the total number of closed and under recovery stores are in the middle of restoration for reopening in Mayand June.
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

10Impact of Earthquake and Other Remarks（Billions of yen）

<Impact of East Japan Earthquake>
Accounts
Total operating revenues
Operating profit
Extraordinary loss
Loss on damages of stores, raw materials, etc.
Subsidy for recovery of stores and franchisee
Subsidiary company-related loss

Net profit
Net sales of all stores
Net sales of existing stores (YoY)<Other Remarks>
Asset retirement obligations （Estimate）
Projected dividend per share (Yen)

Copyright (c) 2011 LAWSON, Inc. All rights reserved.

Impact of earthquake
Non-Consolidated
Consolidated
▲ 4.5
▲ 2.5
▲ 3.5
▲ 2.05.0
4.5
2.0
2.0
2.5
2.50.5▲ 5.5▲ 3.8▲ 22.0
▲ 22.0
▲1.0%
▲1.0%

8.0

7.0175（5 yen increase）

11

LAWSON’s Management Strategy
Takeshi Niinami
President & CEO

Copyright (c) 2011 LAWSON, Inc. All rights reserved.

12

Reassured Our Corporate Philosophy
LAWSON’s Corporate Philosophy

Happiness and Harmony in Our Community

Lifeline of Our
Community

Significance inSmall Format

Values ofNationwide
CVS Chain

Our Mission:
Whatever you want, Whenever and Wherever you need

Copyright (c) 2011 LAWSON, Inc. All rights reserved.

13

OP Growth in Comparison
FY2002=100180
LAWSONFMSEJ160140120

10080
FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011(Forcast)

Aim at stainable growth by upfront investment
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

14Integrated SCM and CRM
Analyze
Customer
Needs
Value-Added
Raw Materials

MeasureOpportunity
Loss
Proactive
OrdersCustomer-Oriented
Merchandise Assortment

SCM
ProductDevelopment

CRM
PointCard(Ponta)

Gross Profit Margin

Proactive
Ordering
SystemReduce
Opportunity
Loss

Sales Growth

Utilize 30 million Ponta point card holders’ profile and PRiSM (proactive ordering system)

Increase shopping frequency and enhance customer loyalty
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

15SPA Model Value Chain
Conventional CVS Model
Outsource to Partners

OP Ratio: 3%R&D

Procure-ment

Manufacturing

Distribution

Sales

POS Data
Analysis

Wholesaler

Factories / Venders

Distribution
CenterFranchiseOwners

SPA-Type Retailer

OP Ratio:
5% and above

Integrate as Internal Value Chain

R&D
Ｐonta card
data analysis

Procure-ment

Manufacturing

Distribution

Sales

Cooperation of Mitsubishi Corp. / Procurement teamwith expertise in commodity market

OP Ratio Target: 5% and above in medium to long term
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

16

Customer Base Expansion by Fresh FoodLAWSON STORE 100

Hybrid Regular LAWSONMetropolitan city format
FY2010： 1,000 stores
FY2011： +200 stores

Nationwide format
FY2010: 1,200 stores
FY2011: +800 stores

Establish 3000 fresh food products oriented stores by FY2011(esp. in residential area)
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

17

Development in Asia
Export Japanese CVS model and its soft skills we developed

BeijingJapan

Shanghai

Chongqing

India
Vietnam Established OverseasOperations Group Communication withlocal partners Hire foreign employees

SingaporeIndonesia
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

18

For Recovery of Shanghai LAWSON’s Ownership
Reinstall knowledge of Japanese CVS to Shanghai stores
Store Management Reforms
Better match to customers in each store location
 Redefine QSC standard Create principles of new store openings
 Relocate and/or close unprofitable stores
Remodeling of Franchisee Structure
Recover chain’s reliability among franchisee Improve supervisors’ roles
 Use MS evaluation and improve quality of franchisee owners
 Provide selected franchisees with opportunities to run pluralstores

Copyright (c) 2011 LAWSON, Inc. All rights reserved.

19Medium- to Long-Term Goals for 2020
Lawson aims world’s
top small format
retailer as SPA

Sales growth

Japan: Expand customer base (Growsenior base)・Fresh foods, healthcare
・In-store kitchens, etc.
Overseas development
Structural improvements in raw
materials and distribution

ROE target: 15-20%
Profitability improvement

Consolidated operating
profit in excess of 100 billion
yen

Operating profit ratio
target: 5%Store structural improvements
・ PRiSM- Multi-partners shopping point cards- MS evaluations
Head Office Structural improvements

Continuous dividend growth

Capital policy
Share buybacks andcancellations

R&D, Training Program, M&A, Alliance
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

20

Sustainable Dividend Growth(Yen)
180

170

175

160
140
120
100
80
60
40
200
2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

(Forecast)Sustain financial stability and investment for long-term growth
Continue to improve capital efficiency targeting ROE of 15% to 20%
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

21

Reference

Copyright (c) 2011 LAWSON, Inc. All rights reserved.

22

Half Years Breakdown of FY2011 Forecasts
FY201１ （Forecast）
1H
2H
FY
884.0 884.0 1,768.0
28.5
29.0
57.5
3.2%
3.3%
3.3%
27.6
27.8
55.4
5.3
14.5
19.8

（Consolidated：Billions of yen）
Net sales of all stores
Operating profit
Operating profit ratio
Recurring profit
Net profit（Non-Consolidated）
Gross profit at existing stores (YoY) 102.0% 101.5% 101.8%
Net sales of existing stores (YoY) 103.5% 101.5% 102.5%
Gross profit margin ratio
30.5% 30.3% 30.4%
Except Cigarettes （Non-Consolidated）

Gross profit at existing stores (YoY) 101.0% 101.0% 101.0%
Net sales at existing stores (YoY) 100.0% 100.0% 100.0%
Gross profit margin ratio
0.3%P 0.3%P 0.3%P
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

23

Capital Expenditure（Consolidated：Billions of yen）

FY2008FY2009FY2010FY2011

ActualActualActualForecast

Total

15.6
6.7
12.0
3.8
38.3

19.8
8.1
9.4
0.6
38.0

13.6
8.9
7.4
1.0
31.0

19.0
10.0
8.5
1.0
38.5

Total depreciation and amortization

20.8

27.4

33.0

37.3

New store
Existing storeIT-related
Other1) Depreciation of property and store equipment includes depreciation for leased property treated as a saleand-purchase transaction due to the application of new lease accounting standards in Japan.
2）Depreciation for FY2009, FY2010 and FY2011 includes amortization.
3)The amount of repayments of lease obligations (consolidated) of FY2010 is 8.7 billions of yen.

– Allocate new store investment based on store openings planof each group– Investment of existing store are focused on renovation into
fresh-food type (hybrid regular LAWSON)
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

Reference
Impact of consolidating
Ninety-nine Plus Inc. (FY2010)
Capital Expenditure:Approx. 2.5 billion yen24

Cautionary Statement
This presentation contains forward-looking statements and forecasts regarding the future plans, strategies and performances ofLAWSON and its subsidiaries and affiliates. These statements and forecasts are not historical fact. They are expectations basedon assumptions and beliefs derived from information currently available to the Company and are subject to risks and uncertainties
including, but not limited to, economic trends, heightened competition in the domestic convenience store sector, personalconsumption, market demand, the tax system and other legislation. As such, actual results may differ materially from estimates.
In September 2008, Ninety-nine Plus Inc. and its subsidiaries became consolidated subsidiaries of LAWSON. Because Ninety-nine
Plus had a March 31 fiscal year-end, the fourth-quarter of fiscal 2008 and fiscal 2009 results (11-month fiscal year due to a fiscal
year-end change) of the Ninety-nine Plus Group have been consolidated in LAWSON’s fiscal 2009 results.
Figures in this presentation have been rounded down.
LAWSON’s fiscal year-end is the end of February.
Copyright (c) 2011 LAWSON, Inc. All rights reserved.

25