Message from the President

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Creating
new forms of conveniences
on-siteSadanobu Takemasu
President and CEO, Representative Director,
Chairman of the Board

Taking a hands-on approach
We cherish the Group philosophy of “Creating happiness and harmony in our communities,” which forms thefoundation of the Lawson Group. Amid unprecedented social change caused by the COVID-19 pandemic in 2020,
we have returned to the starting point of what the Lawson Group can do to create happiness and harmony inour communities. We have been pursuing new conveniences during the pandemic by responding promptly to thedrastically changing needs of our customers.
In our franchise business of convenience stores, franchisees are an important factor. To achieve sustainablegrowth, our franchisees must be profitable. Prior to COVID-19, we emphasized member store profits under our“franchise store profit-focused management” policy, and we added franchise store profits to the company-wide KPI(our Head Office employee evaluation index). Despite declining store sales during the pandemic, we maintained thepolicy. Through the combined efforts of headquarters and franchisees, the franchisee profit per owner continued to
grow in fiscal 2022—as it did in the previous year—even exceeding the pre-pandemic level of fiscal 2019.

06

Message from the President

Since becoming president, I have emphasized a hands-on approach. Each year I visit about 500 storesnationwide. I have also visited stores during the pandemic to talk directly with customers, owners, store managers,
and store crews, and to confirm store operations on-site. I try to make decisions from an on-site perspective, so that
discussions at headquarters take account of what is happening out there in our stores.
Our goal is to provide new forms of conveniences that change with the times, while keeping happiness andharmony in our communities at the core.

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Evolving our concept of“community-based × individual customer and individual store-focused”
Our customers will appreciate our efforts to achieve the Lawson Group Challenge 2025. Through the Challenge,
we offer safe and reliable products that bring a new forms of convenience and a sense of excitement to people’s
daily lives.

Traditionally, the role of a convenience store has been to offer food and beverages to people on the go in the

For Lawson to become a truly convenient part of daily life, we need to do things like respond to regional variations

morning and at lunchtime. Before the pandemic, a campaign was launched to offer family dinners and packed

in food culture. We need to provide products with flavors appropriate to each area—for example, soy sauce-basedlunches for the next day, with the goal of boosting sales in the evening and night hours. This campaign did not

products in Tokyo and dashi-based products in Kansai. This is what we mean by being community-based.

achieve the results we hoped for.

To promote community-based operations, we expanded the area company system in March 2023. The system

Customers’ purchasing behavior has changed with the pandemic. Customers told us that supermarkets were

now covers eight areas nationwide, including Hokkaido and the Kinki region, where we originally rolled out theoften far from their homes and were crowded. They told us they liked having a Lawson store nearby selling tofu,

system. By delegating authority and functions from the headquarters to local stores, we are increasing the degree

milk, bread, and other daily items. As customers’ lifestyles have changed, the new forms of convenience they seekof management autonomy in each area.

from convenience stores has shifted to meet their daily demands. In other words, we can increase the opportunities
for our customers to use Lawson by responding quickly to their needs.

Franchise store owners have responded favorably. They say that they feel closer to the head office and thatpolicies are getting developed faster. By implementing the PDCA cycle closer to customers, we are furthering theconcept of individual customer connecting with individual stores.

Signs of change
To respond to these changes, we launched the Lawson Group Sweeping Transformation Executive Committee

Area Company System Nationwide Expansion

Product and Sales strategy

in September 2020 and have been working on pursuit of ideal store format and product renewal. We added morefixtures to bolster our lineup of frozen foods and daily-delivered foods. And we introduced in-store kitchen facilities
to create an environment that enables us to serve store-cooked rice.
As a result, customers can visit us as part of their daily lives. In fiscal 2022, sales of rice balls and beverages, which
are sensitive to flow of people, had not yet recovered to pre-pandemic levels. But sales of daily-use products—such

Eight areas
nationwide

Kitakanto
Company

as frozen foods, daily-delivered foods, and daily necessities—have exceeded pre-pandemic levels. Finally, the flowof people has recovered in earnest. Along with the increase in daily-use demand, we expect an increase in demand
among our on-the-go morning and afternoon customers.
We are also keen to meet the demand for our delivery services. We want to have a system that covers bothconvenience and daily demand at our physical stores, while also offering the fastest delivery service to meet ourcustomers’ demands. As of May 31, 2023, delivery services were offered by 3,676 of our stores. For both in-personcommerce and e-commerce, we are aiming to become the most convenient Lawson we can be.

Strengthening product appeal andsales floor execution as
we aim for ultimate chain-store management.

Hokkaido
Company

Chugoku-Shikoku
Company
KyushuCompany
Kinki
Company

TohokuCompany

ShutokenCompany

Products

Product

Stock

Delicious taste

Ample
ranges and volumes

Pursuit

Improve execution

Chubu
Company

07

Message from the President

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

At the same time, we still need to offer the products that customers expect from Lawson as a national chain. We

In our Entertainment-related business, our ticketing business has the largest play guide market share, and ourare part of the social infrastructure. As such, in fiscal 2023 we will create sales floors that focus both on the breadthcinema complex business has the third-largest number of theaters in the industry. The ticketing business is tightlyof the product lineup and on the volume of stock. The goal is to offer what is best for the local community and theconnected with travel, and we are looking to expand the travel domain through M&A and alliances. We are taking on

customers who live there.

the challenge of becoming a comprehensive entertainment distribution company.

Comprehensively strengthening the sales floor will enhance the effectiveness of our new ordering system, AICO,
which is scheduled for a full launch in fiscal 2024. This system forecasts demand for each product based on dataIn our Financial services business, we are working to build new services by taking advantage of the businesssuch as weather conditions and previous sales at each store. By providing accurate recommendations for orderenvironment in which around 5 trillion yen is settled annually at Lawson stores in the form of merchandise sales andvolumes and price discounts, it will help to improve sales and gross profit margins. We believe that this initiative will

third party bill settlement services. We are considering developing ATM business and launching new retail business.

improve convenience for customers and enhance the sense of security as a chain and community-based appeal.
By preparing a foundation that can meet the demand for convenience and daily necessities, the convenience store

Regarding our Overseas business, we believe that we are in a significant growth stage in China. As of May 2023,

can become a supply center for daily commodities even in areas with a declining local population. Convenience

we had 5,788 Lawson stores in China and we reached 6,000 stores in August. Our goal is to reach 10,000 storesstores can thrive even in business areas with a population of 2,000.

by 2025. Considering that China’s population is more than 10 times the size of Japan’s, 10,000 stores is merely a

We believe the time will come when customers will meet their weekday shopping needs through convenience
stores and e-commerce, and they will visit shopping centers and supermarkets only on weekends. To promote daily
use of not only foodstuffs but also daily necessities on weekdays, we introduced MUJI products on a full scale frommilestone.
We intend to expand the number of our stores in the Philippines, Thailand, and Indonesia, and to simultaneously
invest in growth and have a return on investment over the next five to ten years.

May 2022. If we can expand our wallet share by supporting the basics of daily life, growth is possible even in thedomestic convenience store market, which is said to be saturated.

Background of Enhanced Shareholder Returns
Growth of Group companies

In the Lawson Group Challenge 2025, our medium-term management vision, we have set an ROE of 15% or more
and an EPS of 500 yen or more as target indicators. Each segment business is promoting action plans to achieve

In the Seijo Ishii business, the Yamato No. 3 Central Kitchen, which started operation in July 2022, has doubled

these targets. After reducing dividends in fiscal 2019 to strengthen support for franchisees, we were able to increase

its capacity for product manufacturing. By making optimal use of the new central kitchen, we will develop products

franchise store profits and recover Lawson Group sales and profits by focusing on our “franchise store profit-focusedand services that are unique to Seijo Ishii and accelerate the opening of new stores in each area, including western

management” policy and by responding to changes in COVID-19. In addition to these factors, as we now see a clear

Japan. We are also considering overseas expansion.

path for growth through fiscal 2025 as a result of the implementation of the action plan, we have decided to increase
dividends starting in fiscal 2023.

08

Message from the President

Introduction

Sustainability Initiatives and GovernanceValue Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Aiming to be the No.1 recommendation

ESG-focused management is also an important issue for us, along with the target indicators of the Lawson Group

Under the Lawson Group Challenge 2025, we aim to become the most recommended brand among customers,

Challenge 2025. We have set forth our environmental vision, Lawson Blue Challenge 2050 ! , and are promoting

society, and peers by creating and offering new conveniences. In the three years following the outbreak of COVID-19,

a variety of initiatives to address environmental issues. We are also working on other initiatives, such as Diversity,

we have established a group-wide system that allows us to respond quickly to change. This includes launching theEquity & Inclusion (DEI).

Lawson Group Sweeping Transformation Executive Committee in September 2020 and introducing the area company

Specifically, doors have been installed on 80% of the refrigerated/freezer showcases at model stores, alongwith solar power panels. Proof-of-concept experiments have been conducted to the goal of reducing electricity

system. We have also been increasing the degree of management autonomy. We are confident that the Lawson
Group’s efforts have been well received by our customers.

consumption by 40% and CO2 emissions by 55% compared to fiscal 2013.
We will continue to develop initiatives that will be supported by all stakeholders, including customers, society,business partners, franchise store owners, store crews, employees, and shareholders. And we will continue touphold our Group philosophy of “Creating happiness and harmony in our communities.” Our wish is to be a company
that brings happiness to our communities.

Avatar customer service

Refrigerated case with door

At our next-generation Green Lawson stores, we have introduced an avatar customer service. We are conducting
a demonstration experiment to remotely explain the operation of the self-checkout system and provide information
on various products and services. This system will enable people who are unable to work at stores in person to play
an active role. And if one person can work at several stores at the same time, this will also help to solve the labor
shortage.
It is important to have strong governance to bring about ESG-focused management and to achieve the target
indicators of the Lawson Group Challenge 2025. Two of Lawson’s five directors are independent outside directors
and three of its five auditors are independent outside auditors. In addition, a special committee has been established,with all five members consisting of independent outside directors and independent outside corporate auditors. The
outside directors and outside corporate auditors play a supervisory and auditing role and discuss management andbusiness issues from their expert perspectives.

09

Community Happiness Creation Process

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Input
Operating Capital

Financial Capital

Diverse store formats and functions that respond to the needs of everyday lifeand realize small commercial area-based manufacturing and retailing

Stable financial foundation enabling a flexible response to changes in the community
Shareholders’ equity

14,631 stores
131 stores
661 stores
345 stores•

NATURAL LAWSON•LAWSON STORE 100•

Hospital LAWSON•Stores with nursing care consultation
desks for seniors•

Stores that sell over-the-counter
pharmaceuticals

20 stores
298 storesEntertainment-related business
•

HMV

•

UNITED CINEMAS

55 stores
399 screensFinancial services business Lawson ATMs
Overseas business

Interest-bearing debt

13,519Human Capital
Employees, who are the most important capital for realizing happiness in our communities
and advanced store productivity
Consolidated employees

6,160 stores

10,648 people

Selection as a Health and Productivity Management Brand 4 times
Certified Health & Productivity Management Organization 7 times
Nadeshiko Brand Selection

Intellectual CapitalSocial and Relationship Capital

Membership base for enhancing customer satisfaction and digital technology
for realizing high-level of store productivity

Customers, involved in the happiness of our communities
Total number of visitors to Lawson stores per day (domestic)

Ponta membership
Approximately 113.78 million people(As of the end of July 2023)•

6 times

Approximately 10 million

Digital technology

Group ID•

339.3 billion yen

175 stores

Seijo Ishii business

Domestic convenience store business271.2 billion yen

Lawson online members*
Approximately 27.5 million people•

Self-checkout registers
All stores•

LAWSON Smartphone Checkout service

107 stores*Lawson online members is a membership service offering access to Lawson Group services such as HMV and L-Tike.

Natural Capital
Food resources for remaining close to our customers
Established

16 LAWSON Farms

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Community Happiness Creation Process

Strategies for Growth1

Introduction

Strategy

Sustainability

Lawson Group Challenge 2025

Recognize, review, and explore community’stransitions and challenges
Business model

2(1)Store network
Overseasbusiness

Domestic and international multi-format expansion

Seijo Ishii
Business

Domestic
CVS

Core
competence

Maximize the value ofthe Lawson brandFinancial
Services
Business

Entertainmentrelated
business(2)O2O
Optimize local people/
consumer touchpoints(3)Data
integration
infrastructure
Analysis based onmembership information
utilizing group IDs

3

Give contribute to
the community

Provide new values

OutputOutcomeDomestic convenience store businessSocial value• Community based × individual customer
and individual store-focused• Provide products and services suited to the
local area and the business environment of
individual stores• Stores well-established in the local
community
Seijo Ishii business• Offer distinctive, high-quality products• Provide entertainment through ticketingand cinema complex businesses

New conveniencein practice• Products and services responsive tocustomer feedback• Sustainable joint ventureswith franchise stores• Provide social infrastructure
Results Consolidated results for fiscal 2022
• Gross operating revenue• Operating income

Financial services business• Develop and offer new retail bank services

988.6 billion yen
55.0 billion yen• Profit attributable to owners of the parent• Dividend per share[A Management Foundation for Creating Happiness in Our Communities]

Corporate governance, internal control, sustainability management

Finance / Company Information

New hubs ofrefreshment inevery community

Entertainment-related business4

Corporate Governance

Our Vision (Goals)

Develop products and services
fulfilling community needs

Business that responds to change

Input

Value Creation

24.6 billion yen
150 yen

LawsonBlue Challenge 2050 !
• CO₂ emissions

Reduce by 100%Per store 2013 levels

Job satisfaction

Spirit of challenge[Group Philosophy]

Creating Happiness and Harmony in Our Communities

Overseas business• Food waste

Reduce by 100%Per store 2018 levels• Japanese-style convenience stores overseas• Providing products and services tailored to thatcountry’s culture• Containers and packaging of
Lawson’s original products
Eco-friendly materials 100% used11

Materiality for Creating Happiness in Our Communities

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Contribution to the Sustainable Development Goals (SDGs)

Identification of material issues (materiality)

Lawson Group’s approach to contributing to the SDGs

issues we have identified that have heavy impacts on the environment, society, and the economy. We compared the

The three promises, a policy based on our Group philosophy, is the foundation of our business and the basis for

The Lawson Group believes that striving to realize the Three Promises to become the hub of refreshment insocial impact (impact level) expressed in stakeholder opinions with the impact on Lawson, and identified Lawson

every community based on its Group Philosophy, “Creating Happiness and Harmony in Our Communities,” ultimatelymaterial issues (materiality) that must be prioritized for us to become a hub of refreshment in every community. We

promotes the Sustainable Development Goals (SDGs). With this in mind, we are working proactively to solve social

will work on these material issues (materiality) toward the future ideal for Lawson.

issues.

Aiming to realize a sustainable society through our business activities, we have been working to establish systems
for solving social issues and implementing PDCA cycles for them, including the establishment of an SDGs Committee
in March 2019.
From March 1, 2021, the Company established the position of Chief Sustainability Officer (CSO), with the president,CEO, and representative director appointed to the position to further strengthen initiatives. In responding to the issues,
the SDGs Committee identifies material issues that align with the Three Promises, and periodically shares the progressof the entire Group, while each division conducts self-directed initiatives in its own business activities.
Furthermore, we have established working groups under the SDGs Committee to strengthen our initiatives on

Impacts of identified social issues
Large

Impact on Lawson (impact level)

Establishing systems for contributing to the SDGs and implementing PDCA cycles

key issues that require a quick response; namely, CO2 emissions reduction, food waste reduction, plastic reduction,
supply chain expansion, and information disclosure.

 istribution of safeDand secure products

Job satisfaction reform

Audit & Supervisory Board

CSO (President and CEO)Management meeting

SDGs Committee

Declining labor force

Super-aging society

Issues of 24-hour operation

Diversity of human resources

Plastic waste issues

Progress of technological innovation

Changing role of the family in society

Massive use of natural resources

Water pollution/shortage
Superior taste
Human kindness
Environmental (Machi) friendlinessDecline and depopulation in local
communities

Increasing health consciousness

Deterioration of ecosystems

Increasing economic inequality
S ustainable primary industry(agriculture, forestry, and fisheries sector)

Medium

Impact on Society (impact level)

Large

Steps to identify material issues (materiality)
https://www.lawson.jp/en/csr/environmental_management/

Signing the UN Global Compact
Lawson signed the United Nations Global Compact in May 2022 and will
Working groups

contribute to the development of a sustainable society by supporting and practicing

CO2 emissions reduction

the ten principles in the four areas of human rights, labour, environment, and anticorruption.

SDGs Promotion Group Meeting(Held on a quarterly basis: general managers and higher)

Declining birthrate

Food loss

MediumSecretariat
SDGs Promotion Office(Held on a quarterly basis: Includes directors from divisions associated with sustainability)

Compliance

Intensified climate change

Development of a stable supply chain

SDGs Committee Organization (as of March 1, 2023)
Board of Directors

Large-scale disasterFood waste reduction

Under our Group philosophy, we will earnestly consider what we can do for our

Supply chain expansion

customers, our communities and the Planet and actively take on the challenge ofresolving medium- and long-term issues involving the environment and society.

Plastic reduction task force

Information disclosure

12Materiality for Creating Happiness in Our Communities

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Material issues (materiality)
Material issues

1

VisionProviding Safety/Security-oriented, Extremely High Value-Added Products
and Services that are Friendly to Society and the Environment

Aiming to be hubsof refreshment
in every community

Promise 1

Surprise “Whew!” discoveries for
products and services

Superior
taste

Synergize the three promises toachieve our vision

Group Philosophy

Promise 2

Clean stores with welcoming
customer service

Humankindness

Creating Happinessand Harmony
in Our Communities

Material issues

2

Supporting health promotion for3
all people through products and stores

Promise 3

Environmental(Machi)friendliness

Reducing food waste,plastic use, CO2 emissions

Material issues
Providing comfortable work environments
4leading to job satisfaction

Supporting empowerment of womenand seniors, as well as children’s growth5

Coexisting synergistically with communities
by serving as part of the social infrastructure

6

Sustainable environmental conservation activities
toward the realization of a carbon-free society

For more information about material issues (materiality)
https://www.lawson.jp/en/csr/promotion/
13