Summary of Results for FY2016

Lawson, Inc.
April 13, 2017
Copyright (c) 2017 Lawson, Inc. All rights reserved.

1

Financial Results for FY 2016
Satoshi Nakaniwa
Senior Vice President
Chief Financial Officer
Lawson, Inc.

Copyright (c) 2017 Lawson, Inc. All rights reserved.

2

Earnings Summary for Fiscal 2016
Consolidated OP 73.7bln yen (+1.7% YoY, -2.2bln yen v. plan)
Consolidated net profit 36.4bln yen (+16.0% YoY, +0.9bln yen v. plan)
ROE
13.5%
Consolidated

Non-consolidated

OP: 73.7bln yen (+1.7% YoY, +1.2bln yen)

OP 57.4bln yen (+0.3％ YoY）
Gross operating profit: +5.4% YoY
Existing-store sales* -0.2% YoY

Recurring profit: 73.0bln yen (+4.9%, +3.3bln yen)
Non-operating loss(net): 0.7bln yen
Loss on lease cancellations 1.2bln yen
Casualty loss (Kumamoto Earthquake) 0.7bln yen
Net profit: 36.4bln yen (+16.0% YoY, +5.0bln yen)
Special loss(net): 14.5bln yen
incl. impairment loss 9.5bln yen
Income taxes and others: -21.3bln(+0.3% excl. ticket sales and others)

Gross profit margin* 31.4% (+0.1pp YoY)
SG&A expenses: +6.6% YoY
642 new store openings(opened 1,055, closed 413 stores)
As of 2017/2: 12,288 stores (Parent), 13,111 stores(Group)

Consolidated subsidiaries
Operating profit at major subsidiary firms
Seijo Ishii
7.7blnInternational operations-2.7bln yen＊Existing-store sales & gross profit margin include the result of LAWSON and NATURAL LAWSON stores.

Copyright (c) 2017 Lawson, Inc. All rights reserved.

3

FY2017 Estimates & Mid-term Management Vision
FY2017 Estimates

Consolidated OP
Consolidated net profit
ROE

68.5bln yen (-7.1%, -5.2bln yen YoY)
33.5bln yen (-8.0%, -2.9bln yen YoY)
12.0%

FY2017 Strategy

Non-consolidated OP 52.0bln yen (-9.4% YoY)

Improving CVS operation

Existing-store sales +1.0% YoY
Gross profit margin 31.7% (+0.3pp YoY)

・Strengthening of CVS operation in 2015, 2016
・Reduced loss on international operations

Investing in growth
・Next-generation IT system
・New business areas (finance, OTC medicine,
healthcare, etc.)
・Initial cost of brand conversions＊These figures show targets of stores including LAWSON and NATURAL LAWSON.

Group stores to increase by 900 storesOpen 1,400 stores (1,000 ordinary new openings and 400 converted stores)
Close 500 stores （End 2018/2: 14,011 stores)

Operating profit at major subsidiary firms
Seijo Ishii
6.9bln yen (-0.8bln yen YoY)
International operations -1.5bln yen (+1.2bln yen YoY)

Dividends per share
255 yen (+5 yen YOY)

Mid-term Management Vision : FY2021

Consolidated OP:100bln yen or more
CVS daily sales (Japan): 600,000 yen/per store
CVS store network (Japan) : 18,000 stores
Copyright (c) 2017 Lawson, Inc. All rights reserved.

D/E ratio: 1.0 or less
ROE: over 15%
4Results Review for FY2016
and FY2017 Strategy
Sadanobu Takemasu
President, Representative Director
Lawson, Inc.
Copyright (c) 2017 Lawson, Inc. All rights reserved.

5

Fiscal 2016 Overview
Consolidated
OP 73.7bln yen (+1.7% YoY, -2.2bln yen v. plan)
連結営業利益737億円（前年比101.7％、計画差▲22億円）
2H
下期実績：連結営業利益は、上期の減益から２桁増益に転換
OP rebounded to record double-digit gain, following 1H fallFull-year:
通期実績：営業利益は、単体・連結ともに増益確保も計画は未達Consolidated and non-consolidated OP rose YoY but fell v. plan
連結当期純利益は、２桁増益で計画達成
Double-digit gain in consolidated net profit achieved the plan
Reasons
for lower-than-expected profit result【計画差要因】 Lower-than-expected
existing-store sales a major factor to the shortfall in consolidated OP 既存店売上高が計画未達となったことが大きく連結営業利益は計画未達
 Net profitmet a target due to tax effect and lower non-operating losses from fewer store closures
閉店数減少による営業外損失縮小や税効果などにより、連結当期利益は計画達成(Billions of yen)

1H

2H

FY2016vs planNon-consolidated operating profit

31.7

25.6

57.4

YOY

-7.7%

+12.4%+0.3%

Consolidated operating profit

39.9

33.8

73.7

YOY

-5.0%

+11.0%

+1.7%

22.6

13.7

36.4

YOY

+14.1%+19.2%+16.0%

Existing-store sales (YOY)

-0.9%

+0.6%

-0.2%

-0.3%P

Gross profit margin

31.3%

31.4%

31.4%

-0.1%P

Consolidated net profit

Copyright (c) 2017 Lawson, Inc. All rights reserved.

-1.5
-2.2
9.0

6

FY2016 Review
Stronger stores

Stronger support for everyday life, refurbished allstores, expand products

Stronger products

Stronger product development, procurement,
production

Stronger franchise
support

Improved store productivity

Change corporate
cultureReformed all operational practices to improve
competitiveness Improved operations with semi-automatic ordering systems, refurbished stores, greatly
expanded product ranges
 CVS rice-based items and over-the-counter fast food could expect more growth, while salesof supermarket alternative categories greatly improved Active preparation for new tablet-based systems to address severe shortage of labor Established SV, MD rules, created Supervising method, launched contact center
Copyright (c) 2017 Lawson, Inc. All rights reserved.

7

FY2017: 1000 Days Action Plan, Year 2

Lay

Refine,Dramatic

Groundworkadvance,

expansion

Strengthen

accelerate

platform

Year 1: FY2016

Year 2: FY2017

Year 3: FY2018

 Refine operations based on platforms built in FY2016, advance and accelerate change Continue to expand everyday products to strengthen evening, nighttime product range Strengthen CVS core products such as over-the-counter fast food and rice-based items
 Improve store productivity by introducing tablets and next-generation POS cash registers
Copyright (c) 2017 Lawson, Inc. All rights reserved.

8

Fiscal 2017 Plan
Consolidated OP 68.5bln yen (-5.2bln yen YoY)
～ Increased investment in building a sustainable business model
expected to lower profit
 Improve existing-store sales and gross margin with stronger over-the-counter fast
food and rice-based core items
 Increase investment in next-generation systems, prepare the launch of financial
services, and promote alliances with other CVS operators(Billionsof yen)Billionyen

FY2017 Plan
Plan

Nonconsolidated

Difference/YOY

Existing-store sales (YOY)*+1.0%

Gross profit margin diff.*+0.3%P

SG&A expenses (YOY)+5% ～ +10%

Operating profit

52.0-5.4 / -9.4%

Difference : consolidated and non-consolidated

16.5+0.1 / +0.9%

Consolidated operating profit

68.5-5.2 / -7.1%

Consolidated net profit

33.5-2.9 / -8.0%* Including LAWSON and NATURAL LAWWSON stores

Copyright (c) 2017 Lawson, Inc. All rights reserved.

9

Fiscal 2017 Plan
FY2017FY2015～2016
Strengthen CVS
 Semi-automatic orders Reinforce support foreveryday life Expand SKU
 New FC contracts
 More competitive
supervisors

Strong stores, strong
products, strong
franchise support

Improve existing-store sales
and gross profit margin
Invest in future growthOP68.5bln yen

FY2021
Japan: existing-store sales
Gross profit margin

CVS
profitincrease International: Reduce loss oninternational operation+1.0%+0.3%pMedium-term vision
 OP

approx. +6.0bln yen

More than 100bln yen
 Daily sales

Investforgrowth New business approx. -2.0bln yen
 Brand changes approx. -2.5bln yen

OP down
approx.

600,000 yen/per store

5.0bln yen

 Systems upgrade approx. -4.0bln yen
approx. -8.5bln yen

Unavoid-able

Changes to subsidiary term end, tax
systems, etc.
approx. -2.5bln yen

Copyright (c) 2017 Lawson, Inc. All rights reserved.

10

FY2017: 1000 Days Action Plan, Year 2
Become an essential part of our communities
Build Next-generation LAWSON CVS model
Create appealing stores for evening/night-time customers
Strongerstore
displays

Stronger
products
Improve store
productivity

Strongerfranchise
supportStronger
operation of
new openings
Improvecompetitiveness“One Lawson”
Revolutionize our operational system
Overhaul fundamental structures, react to changes, challenge future growth opportunities
Copyright (c) 2017 Lawson, Inc. All rights reserved.

11

Stronger Products
Expand product range to ensure variety ofmerchandise that meet customer needs
Product range

Lawson’scompetitive
advantage

Strongermanufacturing

Strengthen core CVS items （boxed-lunches, over-thecounter fast food)Promote additional evening/night-time purchases (salads,deli, frozen foods)

Leverage Lawson strengths for product differentiation
Develop unique Lawson hit products
Strengthen range of over-the-counter fast food side dishes
Further strengthen our superior range of desserts
Develop more healthy products (low-carb items, etcl)

Optimize manufacturing processes and other parts of the
supply chain

Review product development framework at head officePromote mega-vendor strategy
Make production line more efficient by automating boxedlunch and food packaging lines and reducing production
Copyright (c) 2017 Lawson, Inc. All rights reserved.SKUs

12

Stronger Products
CVS

Core CVS
items

Supermarket
alternatives

platform-

Boxedlunchesbuilding

Transform boxed-lunches

initiatives

Desserts

Renewal of our
Uchi Café items

Respond to

Salad,
daily
preparedfood

ExpandSKUs

Deli FF

Wider variety
of sidedishesdifferent
community
needs

PolishOver-thecounter FF

Lawson’s
uniquestrengths

Copyright (c) 2017 Lawson, Inc. All rights reserved.

13

Stronger Products
Product

Strengthen
our food
production
systems

Developing
original
products

Merchandising
Development
Div.

SCI
Product
Development
MD

SCI
R&D
Coordinate

VendorDevelop test
products

Bran bread series

Copyright (c) 2017 Lawson, Inc. All rights reserved.

Merchandising
Div. Lawson

R&D dept. ofvendors
R&D dept. ofvendors

Product
strategy

Mid- to long-term development focus

Aim to revolutionize factory
operations as well by introducing
improved food preparation
technologies, and etc.

Boxed-lunchesoriginally developed

14

Stronger Franchise Support, Store Productivity

AnalogIntegrate Digital
To improve store productivity
Introduce tablets

New POS cash registers
with automatic change machines

Copyright (c) 2017 Lawson, Inc. All rights reserved.

15

Strengthen Store Operation of New Openings,
Expand Network
Fundamental review of new store launch operations
Maximize store power of new openings

Strengthen
new stores

Stronger new
store productranges Improve accuracy of new store semi-automatic ordering Review headquarters support for new storesIn-store systembuilding support

 Store Support Team (SST), Store Opening Team (SOT) Help pay for new store staff recruitment and offer
leadership training

Promote regular new store openings and conversions
through alliances with other CVS operators

Strengthen
network

Save On

Three F
Copyright (c) 2017 Lawson, Inc. All rights reserved.

 Signed business cooperation agreement to transfer
all stores to Lawson brand Start changing brand signage at approximately 500
stores in fiscal 2017/18
 Signed business integration contract in April 2017
 Convert brand signage on 200-300 stores to double
brand LAWSON-THREE F stores in FY201716

New Store Opening Strategy in FY2017
Focus on quality and quantity; 1,400 new stores scheduled
including M&As
FY2017 Lawson Store
Opening Strategy in Japan

Open

1,400

Close
Net Increase

500
900

* Group total Including Lawson Kochi, Inc., Lawson
Minamikyushu, Inc. Lawson Okinawa, Inc., and Lawson Sanin,Inc.

Include 400 conversions
Save On
Three F

Copyright (c) 2017 Lawson, Inc. All rights reserved.

17

New Growth Opportunities
Prepare for growth, promote new business models
Home delivery

OTC medicine

Further improve support foreveryday living, store
Financial services
productivity

New technology

Preparing toestablish
Lawson Bank

Copyright (c) 2017 Lawson, Inc. All rights reserved.

Radio frequency
identification (RFID)

18

New Growth Opportunities

Achieve profit and expand international operation,
to become a future growth driver
China
China
SE
Asia

Japan

Other
areas

South East
Asia
Other
areas

- 1,000 stores as of February 2017
- Turn profit in Shanghai in FY2017- Build win-win partnerships- Seek high-grade partners to assist
expansion into new areas

Mid- to long-term aim: 3,000-5,000 store network
Copyright (c) 2017 Lawson, Inc. All rights reserved.

19

FY2017: 1000 Days Action Plan, Year 2
Become an essential part of our communities
Build Next-generation LAWSON CVS model
Create appealing stores for evening/night-time customers
Strongerstore
displays

Stronger
products
Improve store
productivity

Strongerfranchise
supportStronger
operation of
new openings
Improvecompetitiveness“One Lawson”
Revolutionize our operational system
Overhaul fundamental structures, react to changes, challenge future growth opportunities
Copyright (c) 2017 Lawson, Inc. All rights reserved.

20

Mid-term Management Vision

Sadanobu Takemasu
President, Representative Director
Lawson, Inc.
Copyright (c) 2017 Lawson, Inc. All rights reserved.

21

Mid-term Management Vision
Become an essential part of our communities
Explore new opportunities built on undisputed convenience
So much more than simple products
True community care, closest to home

To be the most reliable store
in each community

Copyright (c) 2017 Lawson, Inc. All rights reserved.

22

Mid-term Management Vision
Build Next-generation LAWSONConvenience Store Model
Become an essential part of our communities
Revolutionize store productivity with next-generation systems
Design and develop our supply chain (mega-vendor, transform logistics, and others)
Advance our franchise model（standardize multiple stores, franchise support)
Develop new operations (financial services, in-store pickup services)Promote alliances with other CVS chains (expand Lawson Group)

Boostdaily sales

Expandbusiness

Optimize
potential
sales

Organic growth,
M&A

Copyright (c) 2017 Lawson, Inc. All rights reserved.

23

Mid-term Management Vision
Key FY2021 target
・Consolidated OP: more than 100bln yen
・Daily sales: 600,000 yen/per store ・Japan CVS network: 18,000 stores
・ROE: over 15%
・Debt/equity ratio: 1.0 or less

Growthstrategy

Daily sales + Expansion

transformation
Strategic Business Next-generation systems
investing  Financial services leading Boost daily sales by strengthening
product range and new stores Expand with new stores and tie-ups
 Financial services, international operation

investment
 Bank loans to fund investment

Build Next-generation LAWSON Convenience Store Model
1,000 Days Action Plan and subsequent three-year plan designed tohelp dramatically improve daily sales and our franchise store system

Financial discipline, shareholder return
ROE target of over 15％, D/E ratio at 1.0 or less （excluding financial services）
Focus on providing stable shareholder returns
Copyright (c) 2017 Lawson, Inc. All rights reserved.

24

Corporate Governance
Sadanobu Takemasu
President, Representative Director
Lawson, Inc.

Copyright (c) 2017 Lawson, Inc. All rights reserved.

25

Corporate Governance
Ensuring independent, transparent management system

Independent
Officers

BoardofManagement
Directors: Three
out Chairman,of eight
President& COO,
CouncilGroup management,
Mitsubishi
cooperation
Auditors: Threeout of Corporation
four

Nomination/Compensation
Committees

Copyright (c) 2017 Lawson, Inc. All rights reserved.

set to be effective on May 30, 2017

The Committees also cover the nomination ofrepresentative directors
Majority of members is independent

26

Corporate Philosophy“Creating Happiness and Harmony in Our Communities.”
Copyright (c) 2017 Lawson, Inc. All rights reserved.

27

Reference

Copyright (c) 2017 Lawson, Inc. All rights reserved.

28

Financial Results for FY2016
Net sales of all stores
Operating profit
Operating profit ratio
Recurring profit
Net profit
EPS (Yen)
Dividend per share (Yen)ROE

FY2015
Actual
2,049.5
72.5
3.5%
69.6
31.3
313.81245
12.0%

Total no. of stores in Japan

12,515(Consolidated：Billions of yen)

Actual2,157.9
73.7
3.4%
73.0
36.4
363.96250
13.5%

FY2016
YoY
105.3%
101.7%- 0.1%P
104.9%
116.0%+50.15+5+1.5%Pvs. Plan
99.0%
97.0%
- 0.1%P
100.0%
102.5%+9.01±0+0.3%P

13,243+728＋14

Note: Total chain store sales (Net sales of all stores) include sales from the convenience store operation in Japan, overseas operations and sales from
Seijo Ishii (consolidated items only). Regarding Seijo Ishii, only the store sales of directly operation are included.
Note: The number of stores is the total number of convenience stores in Japan operated by the Lawson Group plus the number of stores directly operated by Seijo Ishii.
Note: Changes vs. plan indicates comparison with the plan announced along with the FY2016 2Q results.

 Consolidated OP increased 1.7% YoY, but came in 2.2bln yen or 3.0% below target
Up on steady non-consolidated profit, and profit contribution from Seijo Ishii and other subsidiaries.
However, lower-than-expected existing-store sales knocked consolidated OP below target.
 Consolidated net profit increased 16.0% YoY, 2.5% above plan
Increased YoY and v. plan due to tax effect and lower non-operating losses on fewer store closures.
Copyright (c) 2017 Lawson, Inc. All rights reserved.

29

Existing Stores (Non-Consolidated*)* excluding LAWSON MART/LAWSON STORE100 business102.5%

1.0%

0.5%

100.0%

0.0%

-0.5%

97.5%

-1.0%
1H

2H
FY2013

1H

2H
FY2014＜FY2015＞Gross profit margin 31.4%
Existing store sales down 0.2%
(number of customers down 1.0%, spending per customer up 0.8%)

1H

2H
FY20151H

2H
FY2016Gross profit margin difference (YoY, Right）
Gross profit margin difference, excl. cigarette sales (YoY, Right）
Existing stores gross profit（YoY, Left)
Existing stores sales（YoY, Left）

 Existing-store sales down 0.2% YoY. Dipped YoY in 1H on lower ticket sales compared to the previous buoyant
year, but bounced back in 2H. While full-year customer visits fell 1.0% YoY, average customer spend increased
0.8% thanks to concerted efforts to expand product ranges.
 Overall gross profit margin improved 0.1pp YoY to 31.4%. The contribution from cigarette sales continued to fall.
Gross profit margin (excluding cigarette sales) held steady YoY.
 Existing-store gross profit, which has direct implications for franchisee profits, held steady YoY.
Copyright (c) 2017 Lawson, Inc. All rights reserved.

30

Store Openings (Non-Consolidated*)*excluding LAWSON MART/LAWSON STORE100 businessNet store increase （Left）

Store Closure （Left）

Store opening (Left)

Daily sales per new store （Right）(Store number)(Daily new store sales in 1,000 yen)

1,200

600

1,049

900
600

400

653

300
0

200

396

-300
-600

0
FY2013

FY2014FY2015FY2016

 Opened 1,049 stores (including brand name change from other chains) and closed 396 stores, resulting in a netincrease of 653 stores YoY (33 stores more than initially planned).
 Daily sales per new store held steady at 494,000 yen.
 FY2017 Group store plans (incl. Lawson Store 100): Open 1,400, close 500, Net increase: 900＊Converted LAWSON, LAWSON STORE 100 and NATURAL LAWSON stores are included in the new store openings and closure data from FY2015.
＊ Brand changes from other chain stores include transfers from subway kiosks.
＊Stores transferred from Lawson, Inc. to Lawson Sanin, Inc. are not included in the store opening, closure or net increase data.

Copyright (c) 2017 Lawson, Inc. All rights reserved.

31

Key Components of SG&A Expenses
FY2015FY2016

251.6

268.2

Change
+16.6

39.2
11.3

41.5
9.3

+2.2
-2.0

Increase 5-10%
Increase 20-30%

14.7
135.6

13.8
144.3

-0.8
+8.7

Decrease 5-10%
Increase 5-10%

354.9

383.2

+28.2

Increase 5-10%

Actual(Billions of yen)

Selling, general & administrative expenses
Non-consolidated＜Major Expenses＞
Personnel expenses
IT-related expenses(Hardware leasing, software amortization, maintenance, etc.)
Advertising and promotional expenses
Facilities expenses

Consolidated SG&A expenses

Compared to Plan

Compared to Fiscal 2015

Copyright (c) 2017 Lawson, Inc. All rights reserved.

 2.6bln yen below plan on fewer-than-expected
new store openings and restricted advertising
spend and IT related expenses in 2H.

Consolidated

 Up YoY on non-consolidated factors, andconsolidation of business expenses from Seijo
Ishii over a 14-month reporting period.

Non-consolidated

Non-consolidated Consolidated

 A&P: Sharply hiking in 1H mainly for franchisee
support. Spending restricted in 2H due to increase in
FY2016. Full-year decline YoY.
 Other expenses: Increased HQ expenses after HQ
took over a portion of franchisee wastage disposal
and electricity costs.

FY2017
Forecast
Increase 5-10%

 3.0bln yen below plan. Declined on nonconsolidated factors, as well as cost-cuttingfrom Seijo Ishii and foreign-exchange impact
from the Group’s international operations.
32

Earnings of Major Subsidiaries(Billions of yen)

＜ Operating Profit of Major Subsidiaries＞
Lawson Store100, Inc.
SEIJO ISHII CO., LTD.
Lawson HMV Entertainment, Inc.
United Cinemas Co., Ltd.
Lawson ATM Networks, Inc.
Chongqing Lawson, Inc.
Shanghai Hualian Lawson, Inc.

FY2017
YoY change Forecast
+0.1
0.5
+2.0
6.9
-0.3
2.1
+0.1
2.0
-0.1
5.9
+0.3
-0.3
+0.2
0.1

FY2016

FY-endOwnership

Actual

Feb.
Feb.
Feb.
Feb.
Feb.
Dec.
Dec.

100.0%
100.0%
100.0%
100.0%
76.3%
100.0%
100.0%

0.5
7.7
2.1
2.4
5.9
-0.4
-0.5

Note: Law son Mart, Inc. changed its name to Law son Store100, Inc. in March 2016.
Note: United Cinemas Co., Ltd's result YoY changes of FY2016 is compared w ith the result of 14 months of FY2015 due to changing of closing month from March to February in FY2015.
Note: SEIJO ISHII CO., LTD.'s result of FY2016 is result of 14 months (from January 2016 to February 2017) due to changing closing month from December to February in FY2016.

LAWSON STORE100

Generated operating profit of 0.2bln yen. Existing-store sales up 0.9% YoY. Maintains firm
upward sales trend. Expect operation to remain profitable in FY2017.

SEIJO ISHII

Business year-end change to February in fiscal 2016 resulted in the consolidation of 14
months of performance, and a rise in both sales and profit. Forecast a sharp decline in profit
of FY2017 with shorter period of 12 months than FY2016.

Lawson HMW Entertainment

Strong ticket sales but fierce competition for large-scale events weighed on profitability, anddampened profits. Expect to keep the FY2017 profit level same as FY2016.

United Cinemas

A number of hit movies attracted more customers and contributed to a strong rise inoperating profit in FY2016. However, profit expected to fall in comparison in FY2017.

Lawson ATM Networks

Revenue rose on higher numbers of ATM machines and transactions but profit down on
higher costs related to installation of new-style ATMs. Flat OP forecast for FY2017.

Copyright (c) 2017 Lawson, Inc. All rights reserved.

33

Consolidated capital Expenditure & Cash Flow●Consolidated Capital Expenditures（Billions of yen）

FY2014
Actual
49.0
5.8
8.2
2.7

FY2015
Actual
40.4
6.7
15.8
1.4

FY2016
Actual
47.5
7.2
19.2
1.4

FY2017
Forecast
69.0
10.5
18.0
1.5

65.8

64.5

75.5

99.0

Leasing

32.8

38.0

42.6

63.0

Depreciation and amortization

41.8

49.2

56.1

62.3

New stores
Existing stores
IT-related
Other
Subtotal for capital expenditure●Consolidated Cash Flows（Billions of yen）

FY2014
Actual110.5- 100.4

FY2015
Actual112.2- 68.6FY2016
Actual99.8- 76.2FY2017
Forecast
Approx. 120.0
Approx. -110.0

Free cash flows

10.1

43.5

23.6

Approx. 9.0

Cash flows from financing activities- 3.2- 50.2- 25.6

Approx. 1.0(Cash dividends paid)- 22.9- 24.2- 24.7

Approx. 25.0

76.7

69.7

67.6

-

Cash flows from operating activities
Cash flows from investing activities

Cash and cash equivalents at end of period FY2016: 30bln yen bank borrowing at the end February to increase ready liquidity.
 FY2017: Plan to increase cash flow for investing activities to approx.110bln yen to fund investments in next-generation IT systems
and other growth-promoting projects.

Copyright (c) 2017 Lawson, Inc. All rights reserved.

34

FY2017 Company Forecasts (Consolidated)
Net sales of all stores
Operating profit
Operating profit ratio
Recurring profit
Net profit
EPS（Yen）
Dividend per share (Yen)ROE

FY2015
Actual
2,049.5
72.5
3.5%
69.6
31.3
313.81245
12.0%

FY2016
Actual2,157.9
73.7
3.4%
73.0
36.4
363.96250
13.5%

FY2017 Forecast
Plan
YoY
2,310.0
107.0%
68.5
92.9%
3.0%
-0.4%P
65.5
89.7%
33.5
92.0%
334.95-29.01255+5
12.0%-1.5%P

Total no. of stores in Japan

12,515

13,243

14,159+916

101.3%
101.4%
31.3%

100.0%
99.8%
31.4%

102.0%
101.0%
31.7%+0.3%P-0.5%±0.0%P

0.2%+0.2%P(Billions of yen)(Non-consolidated*)*excluding LAWSON STORE100 business

Gross profit at existing stores (YoY)
Net sales at existing stores (YoY)
Gross profit margin ratio
Gross profit margin difference excluding cigarettesales (YoY)

Note: Total chain store sales (Net total of all stores ) include sales from the convenience store operation in Japan, international operations
and sales from Seijo Ishii (consolidated items only). Regarding Seijo Ishii, only the sales of direcctly operated stores are included.
Note: The number of stores is the total number of convenience stores in Japan operated by the Lawson Group plus the number of
directly operated Seijo Ishii stores.

 Improved existing-store sales and gross margin, along with reduced losses from international operations
expected to have positive effect, but overall OP seen declining on increased investment in next-generation
systems and other growth-promoting projects.
Copyright (c) 2017 Lawson, Inc. All rights reserved.

35

FY2017 1H & 2H Estimates(Consolidated: Billions of yen)

Net sales of all stores
Operating profit
Operating profit ratio
Recurring profit
Net profit

FY2017 Forecast
2nd Half Full year
1st Half
1,150.0
1,160.0
2,310.0
37.5
31.0
68.5
3.3%
2.7%
3.0%
36.0
29.5
65.5
21.0
12.5
33.5

(Non-consolidated*) *excluding LAWSON STORE100 business

Gross profit at existing stores (YoY)

Net sales at existing stores (YoY)
Gross profit margin ratio

102.0%
101.0%
31.6%

102.0%
101.0%
31.7%

102.0%
101.0%
31.7%

Note: Total chain store sales (Net sales of all stores) includes sales from the convenience store operation in Japan, international operations andsales from Seijo Ishii (consolidated items only). Regarding Seijo Ishii, only the sales of directly operated stores are included.
Note: The number of stores is the total number of convenience stores in Japan operated by the Lawson Groupplus the number of directly operated Seijo Ishii stores.

Copyright (c) 2017 Lawson, Inc. All rights reserved.

36

Consolidated Balance Sheet at the end of FY2016

Total current assets(Cash and deposits)(Accounts receivable)

Total noncurrent assets
Property, plant and equipment
Intangible assets(Goodwill)
Investments and other assets(Long-terms loans receivable)(Guatantee deposits)

Total Assets

As of Feb. 28, 2017

Change fromFeb. 29, 2016

249.2
68.1
78.3
617.2
324.5
94.8
46.0
197.9
44.4
95.5
866.5

+25.0
-1.6
+10.6
+38.2
+21.7
+10.2
-0.2
+6.3
+3.6
+3.0
+63.3

Copyright (c) 2017 Lawson, Inc. All rights reserved.

(Billions of yen)
Change from
As of Feb. 28, 2017
Feb. 29, 2016

(Retained earnings)

356.7
110.8
31.1
103.1
223.7
56.7
285.9
58.5
165.1

+37.1
-1.3
+29.1
+1.2
+13.1
-0.8
+12.9
+10.5

Liabilities and net assets

866.5

+63.3

Total current liabilities(Accounts payable-trade)(Short-term loans payable)(Deposits payable)
Total noncurrent liabilities(Long-term loans payable)

Net Assets(Common stock)37

FY2016 Performance by Group Segment(Billions of yen)Japan convenience-store business Lawson Store100 business
Seijo Ishii business
Sales ratio
YoY
Sales ratio
YoY
Sales ratio
Net sales for all stores
1,999.9
100.0%
104.5%
43.3
100.0%
94.5%
79.5
100.0%
Gross operating revenue
381.8
19.1%
108.1%
48.1
111.1%
94.9%
85.8
107.9%
Gross operating profit
348.9
17.4%
106.5%
14.3
33.2%
93.9%
32.8
41.3%
SG&A expenses
289.6
14.5%
108.1%
13.8
31.9%
92.6%
25.9
32.6%
Operating profit
59.3
3.0%
99.5%
0.5
1.3%
145.2%
6.9
8.7%

YoY
124.0%
124.4%
125.4%
122.6%
137.2%(Billions of yen)Entertainment business
Sales ratio

International businessYoY

Net sales for all stores
Gross operating revenue
Gross operating profit
SG&A expenses
Operating profit

72.9
35.4
31.4
3.9

97.2%
96.9%
96.7%
97.9%

35.0
28.6
10.4
13.3
- 2.8

Sales ratio
100.0%
81.6%
29.9%
38.0%
-8.1%

Other businessYoY
139.8%
135.3%
140.9%
129.2%
99.0%

Sales ratio
26.5
26.5
20.6
5.8

YoY
103.0%
103.0%
106.2%
92.8%

Note: The Japan convenience-store business combines business results from Lawson, Inc., Lawson Sanin, Inc. and SCI, Inc.
Note: The Lawson Store100 business refers to the business results of Lawson Store100, Inc.
Note: The Seijo Ishii business refers to the business results of Seijo Ishii Co., Ltd.
Note: The Entertainment business combines the business results of Lawson HMV Entertainment, Inc. and related consolidated subsidiaries such as United Cinemas Co., Ltd., etc.
Note: The International business combines the business results of overseas consolidated subsidiaries such as Lawson (China) Holdings, Inc., Shanghai Lawson, Inc. and Chongqing Lawson, Inc.
Note: Other business combines the business results of financial-service related subsidiaries such as Lawson ATM Networks, Inc. and consulting firm BestPractice Inc.

Copyright (c) 2017 Lawson, Inc. All rights reserved.

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