Flash Report on the Consolidated Result
for the 3rd Quarter Ended February 28, 2014
January 9, 2014
Listed Company Name: Lawson, Inc.
Code No.: 2651
(URL http://www.lawson.co.jp/company/ir/index.html)
Company Representative: Takeshi Niinami, Representative Director, CEOContact:Tomoki Takanishi , Financial & Accounting Office General Manager
Scheduled date for submission of quarterly earnings report: January 14, 2014
Scheduled date for payment of dividend: Supplementary Documents quarterly results: Yes
Presentation of quarterly results: No

Tel.+81-3-5435-2773

1. Consolidated Performance for the current 3rd quarter of the current period (from March 1, 2013, to November 30,
2013)(1) Consolidated operating results
Note: Amounts below one million yen are truncated.
Gross operating revenue¥ Million%
Current 3rd Quarter
370,035(0.6)
Previous 3rd Quarter
372,266
3.2

Operating income¥ Million%
54,773
2.4
53,495
7.5

Ordinary income¥ Million%
55,062
3.6
53,163
6.8

Net income
Net income per share
Fully diluted income per share¥ Million%¥¥
Current 3rd Quarter
30,4686.7
305.00304.44Previous 3rd Quarter
28,54638.5
285.79285.35
Notes: Comprehensive income November, 2013 31,526 million( 12.1 %) November, 2012 28,123 million( 34.3 %)(2) Consolidated financial position
Total assets¥ Million
At November 30,2013
618,888
Last fiscal year
579,809
Notes: Shareholders’ equity November, 2013 236,943 million

Net assets
Shareholders’ equity ratio¥ Million%
242,21938.3
230,18139.1
February, 2013 226,475 million

2. Dividends status
Annual dividends per share2012 fiscal year

1Q
¥
―

1H
¥
100.002013 fiscal year―
110.002013 fiscal year
(Forecast)
Notes: Revision of forecast for dividends in the first quarter: No

1

3Q
¥
―

Year-end¥
100.00Total¥
200.00―110.00220.003. Forecast Consolidated Performance for 2013 fiscal year （from March 1, 2013, to February 28, 2014）
Operating income
Ordinary income
Net income
Gross operating revenue¥ Million%¥ Million%¥ Million%¥ Million%
2013 fiscal year
503,000
3.2
70,0005.7
68,4003.8
35,9008.2
Reference: Forecast net profit per share for the 2013 fiscal year: 359.36yen
Note: Revision of forecasts for consolidated performance during the first half: No
4. Notes(1) Change in important subsidiaries during the period (Changes in certain specified subsidiaries resulting in revised
scope of consolidation): No(2) Adoptions of special accounting methods in presentation of quarterly financial statements: No(3) Changes in accounting policies, changes in accounting estimation, retrospective restatement
1. Changes of accounting policies associated with revision in accounting standards: Yes
2. Other changes: No
3. Changes in accounting estimation: Yes
4. Retrospective restatement: No(4) Number of issued shares:i) The number of the stocks issued in the end of term
November, 2013: 100,300,000 February, 2013: 100,300,000ii) The number of treasury shares in the end of term
November, 2013: 400,978
February, 2013: 406,853
iii) Average number of shares during the term
November, 2013: 99,896,486
November, 2012: 99,886,354
Note: Disclosure of progress of quarterly review procedures
At the time of disclosure of this quarterly flash report, review procedures for quarterly earnings reports based on the
Financial Instruments and Exchange Act were being performed.
Note: Terms of use for financial forecasts, and other special notes
Forward-looking statements presented in this material such as financial forecasts are based on currently available
information and certain presumptions deemed to be reasonable as of the date of announcement. They are not intended
to guarantee the Company’s achievement. Actual results may differ significantly from these forecasts due to manyfactors. For preconditions of these financial forecasts and notes concerning their use, please refer to “1. Review ofOperations, (3) Qualitative Information Regarding Consolidated Financial Forecasts” on page 8.

2

1．
．Review of Operations(1) Review of Operating Results
During the first nine months of fiscal 2013, the period from March 1 to November 30, 2013, the Lawson
Group (hereinafter, the “Group”) implemented measures to reinforce its social infrastructure function thatprovides essential items and services at the local level with the aim of realizing the Group’s corporate
philosophy of “Creating Happiness and Harmony in our Communities.” Based on its analysis of purchasedata retrieved from the multi-partner loyalty program, Ponta, the Group focused on customer relationshipmanagement (CRM) and supply chain management (SCM) in order to offer a merchandise assortmentthat meets the specific needs of customers in each neighborhood.
As a result, for the first nine months of fiscal 2013 on a consolidated basis, gross operating revenue
decreased by 0.6% from the corresponding period of the previous fiscal year to ¥370,035 million owing to
a decline of ¥18,926 million in net sales, which offset an increase of ¥16,695 million in operating revenue
resulting from an increase in the number of franchised stores and a decrease in the number ofcompany-operated stores. Although cost of sales fell ¥14,071 million owing to the decrease in the numberof company-operated stores, selling, general and administrative expenses grew ¥10,563 million, up 5.1%
year on year, to ¥217,266 million, driven by a rise in rents and depreciation.
As a result, operating income rose ¥1,277 million, up 2.4% year on year, to ¥54,773 million. Ordinary
income rose ¥1,898 million, up 3.6% year on year, to ¥55,062 million. Net income rose ¥1,921 million,
up 6.7% year on year, to ¥30,468 million.

Operating results by business segment are as follows.

(Convenience Store Operations)
The status of merchandise and services, store operations, store development and other aspects ofConvenience Store Operations for the first nine months fiscal 2013 is outlined as follows.

[Merchandise and Service Strategies]
On the merchandising front, we continued to strengthen our evening and nighttime merchandise
assortment by expanding our lineup of ready-made meals, including carbohydrate-based foods and fast
foods, in order to enhance satisfaction of customers visiting our stores in and after evening hours.
In an effort to improve store profitability, we continued to fortify our lineup of fast foods. With the launchof top-selling products such as “Ohgon-Chicken” (tender and juicy fried chicken with a golden, crispy
crust) fast foods recorded robust sales. The number of stores equipped with MACHI café offering freshly
brewed coffee reached 6,380 as of November 30, 2013. The number of stores with MACHI café, which
was first launched in fiscal 2011, will be expanded to about 8,000 by the end of this fiscal year. At thesame time, starting with regions where MACHI café has been installed, publicity will be strengthened inphases through TV commercials and other means to further enhance customer recognition. In addition, we
3have steadily installed a kitchen facility named Machikado Chubo in more stores, aiming to offer freshly
prepared dishes. The number of stores with the in-store kitchen facility has reached 1,846 as of November
30, 2013, and they are becoming increasingly popular among customers.
In order to achieve sustainable growth leveraged by our differentiation strategy, we have set a mid-term
vision to focus on the “health” of customers in our communities. We have begun taking actions for thisinitiative to help customers lead healthier lifestyles. we are reinforcing product development ofhealth-related foods, including stepping up marketing efforts for low carbohydrate-containing products
such as bran*1 bread and expanding our merchandise assortment of pre-cut vegetables and otherperishable foods. We will further promote development of high quality perishable products by taking
advantage of our unique strengths such as the Nakashima Farming Method*2, one of the most prominent
mineral farming methods in Japan, as well as Lawson Farms. Furthermore, we have been implementing
rigorous initiatives to manage the health condition of our employees since last year as part of ourcorporate drive to promote good health. Our focus on health will be further strengthened as an approach
adopted throughout the entire Lawson chain including franchised stores.
To expand our customer base, we continued to reinforce our merchandise assortment of foods delivered
on a daily basis and processed foods that are purchased in combination with fresh foods, especially atstores focusing on perishable products. Also, as part of its measures to boost its perishable-foods-related
business, the Company is planning to acquire the Group’s store-related assets including franchise
agreements for LAWSON STORE 100 fresh foods convenience stores as of February 1, 2014. By thus
centralizing the chain-store-related back-office tasks within the Group, including management of store
assets and promotion of franchising, we will strive to launch more stores tailored to the customer needs ofeach neighborhood and implement efficient area strategies.
*1

Bran: The external layer of wheat. Contains abundant nutrition including dietary fiber, iron, calcium, magnesium, zinc,and copper. The food is noted for its low level of carbohydrate.
*2

Nakashima Farming Method: A cultivation method that supplies appropriate nutrients in accordance with the growth

status of crops and the nutritional balance of the soil (mineral balance). Uses techniques for developing healthy soil basedon diagnosis of soil conditions in conjunction with techniques to control the growth process of crops to maintain healthy
growth.

4

[Breakdown of sales at chain stores by merchandise category]
Fiscal period

Previous 3rd Quarter

Current 3rd Quarter

March 1, 2012 to November 30, 2012

March 1, 2013 to November 30, 2013

Sales

Percentage of

Sales

Percentage of(Millions of yen)

Total (%)

(Millions of yen)

Total (%)

Product group
Processed foods

812,201

56.0

814,329

55.0

Fast foods

283,69619.6

311,060

21.0

Daily delivered foods

207,982

14.3

209,531

14.2

Nonfood products

146,699

10.1

144,6429.8

1,450,579

100.0

1,479,564

100.0

Total

Note: The above figures represent sales of convenience stores managed by the Group.

In sales promotions, we implemented a point-reward campaign targeting Ponta members to encouragepurchasing with the aim of increasing the rate of repeat visits.
Total Ponta members reached 59 million as of November 30, 2013, including members that joined
through other participating companies. The sales ratio of Ponta members reached approximately 49%.

[Store Operations]
In store operations, by using the store-by-store analysis reports formulated based on Ponta members’ data,
which we started distributing to franchised stores in March, we encouraged sharing of initiatives andknowledge among all stores and continued striving to achieve merchandise assortment and store features
tailored to each store.
Furthermore, we have also continued implementing measures to streamline our order placement
procedures and reduce lost opportunities. Going forward, we will further push forward with our efforts toachieve merchandise assortment that suits customers visiting each store by leveraging Ponta members’
data and implementing shelf allocation tailored to the locational characteristics of each store.

[Store Development and Store Format Strategy]
In opening new stores, the Group has set itself apart from the excessive store-opening of the competition
that is prevalent in the convenience store industry by strictly adhering to its proprietary standards for
opening stores that focus on maximized return on investment (ROI) and prioritizing profitability.

5[Change in the Total Number of Stores]
Total stores as of

Change during

Total stores as ofFebruary 28, 2013

fiscal year

November 30, 2013

LAWSON

9,642

309

9,951

NATURAL LAWSON

110

(3)

107

LAWSON STORE100

1,224

(12)

1,212

Total

10,976294

11,270[Distribution of Stores in Japan by Region (As of November 30, 2013)]
NumberPrefecture

NumberPrefectureof stores

NumberPrefectureof stores

NumberPrefectureof stores

NumberPrefectureof storesof stores

Hokkaido

596

Saitama

476

Mie

107

Okayama

139

Saga

63

Aomori

197

Chiba

450

Ishikawa

99

Hiroshima

166

Nagasaki

99

Akita

178

Ibaraki133

Toyama183

Yamaguchi

116

Oita

157

Iwate

158

Tokyo

1,556

Fukui

104

Tottori

105

Kumamoto

107

Miyagi

213

Kanagawa

827

Kyoto

266

Shimane107

Miyazaki

94

Yamagata

69

Shizuoka

209

Shiga

139

Kagawa110

Kagoshima

119

Fukushima

92

Yamanashi

99

Nara

100

Ehime

175

Total

Niigata119

Nagano151

Wakayama

114

Tokushima

115

Tochigi

132

Aichi

529

Osaka

1,000

Kochi

66

Gunma

86

Gifu

139

Hyogo

605

Fukuoka

406

11,270The number of LAWSON STORE 100 fresh foods convenience stores reached 1,212 as of November 30,
2013. Conversion of company-operated stores into franchised stores is steadily progressing. In addition,
the number of fresh food-type LAWSON stores, which are enhanced conventional LAWSON stores witha stronger assortment of perishable foods and daily delivered foods, totaled 6,191 as of November 30,
2013.With the aim of steadily supplying high-quality products, we are operating 10 Lawson Farms as ofNovember 30, 2013 in Japan, which are partially funded by the Group, and are selling fresh vegetables
produced at these farms primarily at fresh food-type convenience stores.
The number of LAWSON chain stores operated in Kagoshima Prefecture by Lawson Minamikyushu, Inc.
reached 82 as of November 30, 2013. The number of LAWSON chain stores operated in Kumamoto
Prefecture by Lawson Kumamoto, Inc. stood at 24 as of November 30, 2013. And the number of
LAWSON chain stores operated in Okinawa Prefecture by Lawson Okinawa, Inc., our equity-method
affiliate, totaled 160 as of November 30, 2013.

6

(Overseas Operations)
In the People’s Republic of China, the Group’s operating companies shown on the following table haveopened stores in Shanghai, Chongqing, Dalian, and Beijing. In May 2013, we established Beijing Lawson,
Inc. which opened two stores in August. In Indonesia, PT MIDI UTAMA INDONESIA Tbk, in which
Lawson Asia Pacific Holdings Ptd. Ltd. (hereinafter, “LAP”), our Asian umbrella subsidiary in Singapore,holds a 30% stake, operates Lawson stores. In Thailand, Saha Lawson Co., Ltd. (hereinafter, “Saha
Lawson”), a joint venture between LAP and the SAHA Group, Thailand’s leading distributor of consumer
goods, operates stores under the store brand of LAWSON108. Starting the second quarter, Saha Lawson’s
financial performance has been posted on the Group’s consolidated profit and loss statement. The numberof LAWSON stores operated by Lawson USA Hawaii, Inc. in Hawaii, U.S.A. reached 4 as of November
30, 2013.

[Distribution of LAWSON Brand Stores Overseas by Region (As of November 30, 2013)]
CompanyCountry/region

Number of stores(As of February
28, 2013)
305

Changeduring fiscal
year
(9)

Number of stores(As of November
30, 2013)
296

Shanghai Hualian Lawson, Inc.

Shanghai, China

Chongqing Lawson, Inc.

Chongqing, China

49

26

75

Dalian Lawson, Inc.

Dalian, China

8

7

15

Beijing Lawson, Inc.

Beijing, China

-

5

5

Saha Lawson Co., Ltd.

Bangkok, Thailand

-

24

24

PT MIDI UTAMA INDONESIA Tbk

Capital City ofJakarta and its
suburbs, Indonesia
Hawaii, U.S.A.

83

(20)

63

2

2

4

447

35

482

Lawson USA Hawaii, Inc.
Total

*Saha Lawson Co., Ltd. possesses 242 stores under the “108 Shop” brand in addition to the LAWSON
108 stores above.

(Other Businesses)
In addition to Convenience business and Overseas business, the Group is involved in the Entertainment &Home Convenience business, and other businesses.
Lawson HMV Entertainment, Inc., our consolidated subsidiary that operates Entertainment & Home
Convenience business posted a solid performance led by an increase in ticket sales of concerts, events andleisure activities.
Lawson ATM Networks, Inc., which operates a financial services-related business, started providing
financial services for Shinsei Bank and the Chukyo Bank in October 2013 and for JA Bank and JF Marine
Bank in November 2013. A solid financial performance was displayed by Lawson ATM Networks, with7

the total number of its financial institution partners reaching 66 nationwide including online banks and thenumber of ATMs installed nationwide totaling 10,032 as of November 30, 2013.

(2) Qualitative Information Regarding Changes in Consolidated Financial Indicators
As of November 30, 2013, total current assets stood at ¥204,408 million yen, climbing ¥24,112 million
from February 28, 2013, the end of the previous fiscal year. This reflected an increase of ¥9,203 million inaccounts receivable-due from franchised stores, primarily owing to procurement of year-end holiday season
merchandise by these stores. Noncurrent assets grew ¥14,967 million from February 28, 2013 to ¥414,480
million, mainly owing to an increase of ¥16,758 million in property and store equipment resulting from
opening of new stores. Consequently, total assets climbed ¥39,079 million from the end of the previous
fiscal year to ¥618,888 million.
As of November 30, 2013, total current liabilities increased ¥18,544 million from the end of the previous
fiscal year to ¥258,338 million, mainly reflecting an increase of ¥15,447 million in accounts payable-tradeowing to a rise in the number of stores and total procurement value across the entire chain. Noncurrent
liabilities stood at ¥118,331 million, growing ¥8,497 million from February 28, 2013, mainly owing tolease obligations growing ¥8,749 million due to opening of new stores. Consequently, total liabilities
increased ¥27,042 million from the end of the previous fiscal year to ¥376,669 million.
As of November 30, total net assets stood at ¥242,219 million, climbing ¥12,037 million from February
28, 2013. This was mainly due to an increase resulting from a first nine months’ net income of ¥30,468
million, a decrease resulting from payment of ¥20,978 million in dividends, foreign currency translation
adjustments of ¥1,149 million, and a growth of ¥1,425 million in minority interests. Consequently,
shareholders’ equity ratio amounted to 38.3%, down from 39.1% as of the end of the previous fiscal year.

(3) Qualitative Information Regarding Consolidated Financial Forecasts
The financial forecasts announced on October 8, 2013 remain unchanged.

2．
．Other(1) Change in important subsidiaries during the period (Changes in certain specified subsidiaries resulting
in revised scope of consolidation): No(2) Adoptions of accounting methods particular to presentation of quarterly financial statements: No(3) Changes in accounting policies, changes in accounting estimation, retrospective restatement: Yes(Changes in accounting policies that are difficult to differentiate from changes in accounting estimation)
Pursuant to an amendment in the Corporation Tax Act, the Company and its domestic consolidated
subsidiaries have changed their depreciation method with respect to properties and store equipment
acquired on and after March 1, 2013, starting from the first quarter of the consolidated fiscal 2013 underreview. The impact of this change on operating income, ordinary income, and income before income taxes
and minority interests for the consolidated the first nine months fiscal 2013 is minimal.

83. Consolidated Financial Statements etc.
(1)Consolidated Balance Sheets (Unaudited)（Millions of yen）

As of November 30, 2013 and February 28, 2013
February 28, 2013

November 30, 2013

Cash and deposits

84,77082,596

Accounts receivable-due from franchised stores

25,37434,577

Merchandise

8,963

10,158

Accounts receivable-other

46,00853,433

Deferred tax assets

4,656

3,445

Other

11,80422,033

Allowance for doubtful accounts(1,281)(1,836)180,296

204,408

242,934

260,065

Accumulated depreciation(124,562)(133,807)

Buildings and structures, net

118,372

126,257

Vehicles, tools, furniture and fixtures

67,39966,868

Accumulated depreciation(52,637)(54,031)

Vehicles, tools, furniture and fixtures, net

14,761

12,837

96,251

117,280

Accumulated depreciation(30,452)(41,712)

Lease assets, net

65,79975,567

Other

10,205

11,234

Subtotal

209,138

225,897

Software23,914

20,350Goodwill

9,683

9,835

Other

491

498

Subtotal

34,08930,684Long-term loans receivable

34,58033,449

Guarantee deposits

86,10986,008Deferred tax assets

16,215

16,973

Other

20,596

22,535

Allowance for doubtful accounts(1,217)(1,067)

Subtotal

156,285

157,898

Total

399,513414,480

Total assets

579,809618,888

Current assets:

Total
Noncurrent assets:
Property and store equipment:
Buildings and structures

Lease assets

Intangible assets:

Investments and other assets:9

（Millions of yen）
February 28, 2013

November 30, 2013

Accounts payable-trade87,187

102,635

Accounts payable-due to franchised stores

1,403

1,222

Short-term loans payable

1,431

680

Lease obligations

14,48916,120Accounts payable-other

26,10531,170

Income taxes payable

14,474

7,233

Deposits received

87,52991,466

Provision for bonuses

2,544

1,289

215

146

4,412

6,374

239,794258,338

Lease obligations

47,20755,956

Provision for retirement benefits

9,898

10,827332

393

Long-term guarantee deposited

34,80432,806

Asset retirement obligations

16,682

17,565

907

781

Total

109,833

118,331

Total liabilities

349,627

376,669

Capital stock

58,50658,506

Capital surplus

47,71847,731Retained earnings

121,154

130,644

Treasury stock(1,593)(1,575)

225,785

235,30778(125)

Revaluation reserve for land

(567)

(567)

Foreign currency translation adjustment

1,179

2,329

Total accumulated other comprehensive income

690

1,635

Subscription rights to shares

427

571

Minority interests

3,279

4,704

Total net assets

230,181242,219

Total liabilities and net assets

579,809618,888

Current liabilities:

Provision for point card certificates
Other
Total
Noncurrent liabilities:

Provision for retirement benefits to executive officers

Other

Shareholders’ equity:

Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities

10(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Unaudited)
Consolidated Statements of Income (Unaudited)
For the 3rd Quarter of the fiscal year (From March 1, 2012 to November 30, 2012) (From March 1, 2013 to November 30, 2013)（Millions of yen）
November 30, 2012

November 30, 2013

Gross operating revenue

372,266

370,035

Net sales

149,103130,177

112,067

97,99637,03532,180

Income from franchised stores

175,951

184,707

Other

47,211

55,151

Operating revenue

223,162

239,858

Operating gross profit

260,198

272,039

206,702217,266

53,49554,773

1,453

2,118

Interest income

553

622

Compensation income

151

455

Other

748

1,041

1,785

1,829

Interest expenses

914

968

Loss on cancel of lease contracts

329

461

Other

541

399

53,16355,062

324

403

Gain on sales of investment securities

145

403

Gain on bargain purchase

153

-

Other

25

-

3,859

4,322

890

1,832

2,744

2,075

225

415

Income before income taxes and minority interests

49,62851,143

Income taxes:

20,836

20,480

Income taxes-current

18,916

19,906

Income taxes-deferred

1,919

573

28,792

30,663245

194

28,54630,468

Cost of sales
Gross profit

Selling, general and administrative expenses
Operating income
Non-operating income and expenses:
Non-operating income:Non-operating expenses:

Ordinary income
Extraordinary income and loss:
Extraordinary income:Extraordinary loss:
Loss on retirement of noncurrent assets
Impairment loss
Other

Income before minority interests
Minority interests in income
Net income

11Consolidated Statements of Comprehensive Income (Unaudited)
For the 3rd Quarter of the fiscal year (From March 1, 2012 to November 30, 2012) (From March 1, 2013 to November 30, 2013)（Millions of yen）
November 30, 2012
Income before minority interests

November 30, 2013

28,792

30,663

Valuation difference on available-for-sale securities

(52)

(203)

Foreign currency translation adjustment

(66)

1,743

Share of other comprehensive income of associates accounted

(550)

(676)

Total other comprehensive income

(669)

863

Comprehensive income

28,12331,526

Owners of the parent

27,872

31,414

Minority interests

250

112

Other comprehensive income

for using equity method

Comprehensive income attributable to12(3) Notes on Premise of Going Concern
Not Applicable.

(4) Notes on Significant Changes in the Amount of Shareholders’ Equity
Not Applicable.

13