Lawson Group Challenge 2025 Overview

We’re striving to achieve sustained growth by fostering the evolution of
the initiatives of the Lawson Group Sweeping Transformation Executive Committee
while building on the foundation laid by past measures.

Introduction

Value Creation

Lawson Group Challenge 2025

2021-20222020
2017-2019
Active IT investment
Next-generation systems
Adopting automatic change-dispensing POS registers andnew store computers and tablets at all storesFranchise store profit-focused management
The headquarters takes responsibility for
maintaining franchise store profits
Navigating abrupt changes in customers’ andsociety’s values as a result of the pandemic.

Creating a basis for new ways of convenience toaccommodate post-pandemic life

Strategy

Sustainability

Corporate Governance

Finance / Company Information

2023-2025
New hubs of refreshment
in every community
New convenience in practice

Improving store display hardware
Enhancing in-store kitchens, frozen foods, and delivery service

Lawson Group
Sweeping Transformation Executive Committee(Short term: Daily sales improvement)

Lawson Group
Sweeping Transformation Executive Committee(Medium and long term)• Pursuit of ideal store format project• Machikado Chubo in-store kitchens project• Product renewal project• MUJI introduction project• Customer-centric supply chain reform project• Vendor distribution reform project• Unified use of Group data project• Pursuit of ideal store format 2.0 project and other projects

Launching the Lawson Group
Sweeping Transformation Executive Committee

Fiscal 2017 to fiscal 2020: Laying a new foundation
From fiscal 2017 to fiscal 2019, we made active IT investments in an effort to address labor shortages caused by

Fiscal 2021 onward: Implementing new ways of convenience andrealizing new hubs of refreshment in every community

the shrinking of the working age population and to further streamline store operations. In fiscal 2017, we introduced

We formulated the Lawson Group Challenge 2025 in fiscal 2021 to prepare for 2025, the 50th anniversary of our founding.

tablets for managing stores’ work schedules in order to put in place an environment in which store crews could do

The initiative strives to put into practice our Group philosophy of “Creating Happiness and Harmony in Our Communities”

their jobs in a consistent and uniform manner, and by fiscal 2019, we had introduced automatic change-dispensing

by ensuring we’re the No. 1 recommended business in our industry by customers, society, and partners (franchise stores,

POS registers so that foreign and newly hired store crew members could easily operate registers.

employees, and other stakeholders) alike and creating new hubs of refreshment in every community in the pursuit of new

In fiscal 2020, when the business environment changed dramatically as a result of the pandemic and store

ways of convenience. To realize new ways of convenience, we launched the Lawson Group Sweeping Transformation Executive

sales were falling, we responded by embracing an approach to management that focuses on franchise store profit,

Committee, which is undertaking a variety of initiatives centering on the three promises of our business policy: “Superiormoving quickly to implement a thorough slate of pandemic-related measures at stores while offering headquarters

taste,” “Human kindness,” and “Environmental (Machi) friendliness.” The committee, which is chaired by the president toassistance to low-revenue stores. By focusing on ensuring an environment in which franchise stores could operate

ensure it can function in an agile manner, is carefully managing progress by setting milestones for individual projects.

with peace of mind and on orchestrating a recovery in sales, we were able to maintain franchise store profit on

During fiscal 2021 and fiscal 2022, we achieved results by implementing initiatives to make daily sales improvements;

par with the previous fiscal year. Furthermore, we launched the Lawson Group Sweeping Transformation Executive

for example, through the pursuit of ideal store format project and implementation of the Machikado Chubo in-store kitchens

Committee in September with the goal of realizing growth in the new business environment and launched a series

project. Since fiscal 2023, we’ve been steadily implementing a series of medium- and long-term initiatives, includingof initiatives to give shape to a Group-wide growth strategy.

adopting a next-generation order system and distribution system based on two daily deliveries, reducing food waste
and CO2 emissions by the pursuit ideal store format 2.0 project (for example, by installing doors on open cases), andundertaking human resources program reforms.

14

The Lawson Group Sweeping Transformation Executive Committee

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Overview of the Lawson Group Sweeping Transformation Executive Committee
Committee chair: Sadanobu Takemasu, President and CEO, Representative Director, Chairman of the Board and CSO*
Pursuit of ideal store format

Transforming
store displays

Transforming
profit structuresand productivity

Creating stores where people
come to purposely shop for
essential daily goods that satisfy
new lifestyles and values

Improving profitability offranchise stores,
headquarters and operatingcompanies by reviewing costs
and striving to increase revenue

Transforming worker
motivation, etc.

FY

Machikado Chubo in-store kitchens

Introduce into more stores, renew menus

Product renewal

Expansion of daily and frozen foods anddelicatessen products

MUJI introduction

Introduction of MUJI products

2023-FY2024

Realize
the new CVS modelat stores

The No.1 recommendation acquiring

Improving to products and service level(ensuring that we’re the No.1 recommended business in our industry by customers, society, and partners)

Customer-centric supply chain reform

Design of optimal supply chains

Optimization of vendor structures, strengthening of product appeal, establishment of an optimized shipping system,and establishment of a refrigerated distribution model and expansion of its coverage

Unified use of Group data

Infrastructure development

Expansion of a marketing business utilizing data and owned media

Pursuit of ideal store format 2.0

Environmentally-friendly stores and efforts to
reduce electricity use and labor requirements

Internal structure reform

Development of lean headquarters structures

Franchise model reform

Establishment of a new,sustainable franchise modelWork motivation reform
Store crew motivation

Realizing
new ways of
convenience

Orchestrating a leanGroup transformationand ensuring a solid revenue base

Improvement of the Group’s brand value
Policies to support employees who embrace challenges and improvement of store crew motivation

Personnel system reform

Human resource program reforms placing job-and
performance-based employment in its core, development ofmanagement personnel training base, work motivation reform

50th anniversary executive

Planning and implementation of events and communications
befitting the 50th anniversary of the company’s founding

Operating companies

Seeking to provide new value thathorizontally combines the Group’s
overall strengths

Investments in Group growth(operating companies)

Incubation business(delivery, etc.)
Group businesses(Seijo Ishii, Entertainment, Financial, Overseas)

Pursuit of SDGs

Contributing to the Sustainable
Development Goals (SDGs)

Pursuit of SDGs

*CSO: Chief Sustainability Officer

2025

FY

Introduction of a new semi-automatic ordering system

Vendor distribution reform

Group branding
Continually reforming motivating
factors for all franchise store,
headquarters, and Group
company employees

2022

FY

Refurbishment of store displays
and introduction of new fittings

Group businesses(Seijo Ishii, Entertainment, Financial, Overseas)

Reduction of CO2 emissions, plastic use, food waste, etc.

Improving employee satisfaction
at the Lawson Group

Growth of all operating companies

Realizing a sustainable society
through business activities
15

Sweeping Transformation Executive Committee Projects

FeatureTransforming Store Displays

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Machikado Chubo In-store Kitchens Project

We want customers andfranchise stores to know thatour products are specificallyfor them
General manager of daily foods and in-store kitchen dept. ,Merchandising division

Fumiki Mizushima
As of the end of fiscal 2022, approximately 9,200 stores had introduced the Machikado
Chubo in-store kitchens, which provide freshly prepared in-store bento (boxed meals) andsandwiches that are now among Lawson’s signature products. What is the reason for theirsuccess? We asked Fumiki Mizushima, the general manager of Machikado Chubo.

C hic

Focusing on the taste of store-cooked ricek e n K a r a- a ge(Frie d C hic
ken

)B
en

charge of the Machikado Chubo in-store kitchens since 2019 and was in
the midst of trial-and-error efforts when the spread of COVID-19 cleared
the streets of people.

toMizushima, a 20-year veteran of product development, has been inalternative to eating out. When franchise stores told us how helpful this
was, we were convinced that this could turn crisis into opportunity.
“The first hit product of Machikado Chubo was the Thick Pork Cutlet
Sandwich. It takes time and effort to make, but it is a dish that conveys“Sales of onigiri rice balls and bento (boxed meals), which had been

the deliciousness of freshly fried pork cutlet straight to your taste buds.

stable every day, became unpredictable, and waste loss became a

In 2021, we also collaborated with famous restaurants such as Maisen,

serious problem. This was a big problem for our franchise stores. But

which is renowned for its pork cutlets. In 2022, we added Chicken Kara-

with Machikado Chubo in-store kitchens, which allow on-site cooking,age Bento (boxed meals) and Thick Pork Cutlet Bento to the existing menu

managers can decide whether or not to make the food on a particularof rice bowls to make people understand how delicious in-store cookedday. Since rice cooked in the store is served on the spot, it can be anrice can be.”16

Sweeping Transformation Executive Committee Projects

Featurec

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information“We are particular about the taste of rice. We previously used one

There is a noticeable difference in taste between rice that has been allowed

variety of rice nationwide, but now we have divided the country into six

to sit after cooking and rice that has been freshly cooked in the store. This

blocks, with each serving the rice that people in that region know anddistinction in taste is clearly apparent even with fried food. It is such added

Machikado Chubo in-store kitchens have already been implemented

love.”

value that comes from in-store cooking that Mizushima is pursuing within approximately 9,200 stores. Installation of kitchen facilities is almost

Machikado Chubo in-store kitchens.

complete, except for those stores located in narrow buildings or in train

Environmentally friendly, reduces waste

and Koshihikari from Niigata in the Kanto area. Products made with locally-“For instance, when it comes to onigiri (rice balls), factories excel in terms

stations where there is insufficient backroom space. Average sales

produced rice recorded significant growth in sales, especially in regions likeof productivity. We carefully evaluate the difference in taste and the quality of

per store has doubled compared to fiscal 2019, and we foresee it

Hokkaido, where they were introduced early on.

service between factory production and in-store cooking, and examine thequadrupling in the future.

“Both customers and member of franchise stores saw the products

unique value of each in depth. The value of Machikado Chubo in-store kitchens“The initial expansion scale should be about 10,000 stores. Goingas something customized for them. Convenience stores operate as alies in the delicious, freshly cooked products made in-store. This serves as

forward, we intend to focus on expanding the business area of individual

business in partnership with franchisees, so it is important that they feela differentiating factor from other chains and benefits our franchisees.

stores by increasing delivery and mobile ordering (cooking after receiving

an attachment to the products. Since they cook these products themselves

Particularly crucial is cooking the rice in-store. We will not deviate from thisthe order).”in the store kitchen, they naturally feel a strong connection to them. The

fundamental principle.”products become big sellers and the stores feel proud of them.”

Ma

Introduction

Machikado Chubo In-store Kitchens Project

For example, Fukkurinko is used in Hokkaido, Akita-Komachi in Tohoku,

hiTransforming Store Displays

k

o
ad

C h u b o p r o d u ct s
in a s tore

In response to Mizushima’s aspirations, many requests have beenThis will not only propel business but also contribute to improving theenvironment and society.

received from franchisees for specific improvements. The biggest difference“The shorter time from food preparation to sale allows for the use

in developing Machikado Chubo in-store kitchens and other products is theof fewer additives and significantly reduces waste when compared tostrong commitment from franchisees to improve products through their own

making food in factories. It may be a solution to the long-standing issue

efforts.

of wasted bento boxes. We believe that Machikado Chubo is friendly“For example, with the popular pork cutlet sandwich, it takes time for store
crew to become skilled at making it. While looking for ways to offer it faster,

to both the community and the environment and benefits everyone
concerned.”a franchisee suggested that we use the giant pork sausages sold as counterfast food: if you fry the sausage, place it in the bun, and pull out the skewer,
anyone can quickly make a hot dog. This is how products have started toemerge thanks to franchisee input.”
Multiple menu items can be created from a single ingredient, and kara-age
can be used both as a side dish and in bento boxes. If we can achieve thisflexibility to meet demand at any particular time, it not only improves revenue
but also reduces the cost burden for franchisees, who face the challenge oflabor shortages.
“As labor shortages resurge in the post-pandemic era, a product improvement like the aforementioned hot dog example is one way of streamlining the cooking process to improve efficiency. However, that alone is not
sufficient. Currently, we are working on implementing systems such as multilingual manuals to ensure that even store crew who are not proficient inJapanese can create products for the Machikado Chubo in-store kitchens.”

17

Sweeping Transformation Executive Committee

Transforming Profit Structures and Productivity

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Vendor Distribution Reform Project

Establishment of an optimized shipping modelTransition to two daily deliveries of chilled and temperature-controlled products

Optimizing vendor structures and strengthening product appeal
We’re optimizing vendor structures in order to strengthen product appeal and maintain stable supply structures.

From December 2023 to March 2024, we will progressively change the number of shipments to stores of

In addition, we acquired a 10% stake in NC·GD Holdings Co., Ltd., which was established as the parent company ofchilled and temperature-controlled products [including bento (boxed meals), noodle products, prepared foods, andGourmet Delica Co., Ltd., and Nippon Cookery Co., Ltd., both vendors that manufacture and sell products including

sandwiches] in order to comply with the Act on the Arrangement of Related Acts to Promote Work Style Reform,

rice balls, sushi, bento (boxed meals), and prepared foods to Lawson. The investment reflects an effort to provide

which will affect delivery drivers when it takes effect in April 2024, while reducing CO2 emissions and controlling

better products to customers by enabling us to become even more deeply involved in product manufacturing andcosts. Although we switched from three to two daily deliveries in an area that accounts for about 30% of ourdevelopment.

stores from 2005 to 2018 in an effort to streamline product manufacturing and shipping work, the new approach
will change the number of deliveries in the five largest metropolitan areas (Sapporo, Tokyo, Nagoya, Osaka, andFukuoka), which account for about 70% of all stores, with the result that all stores will receive two deliveries per

Nissui

Mitsubishi Corporation

70%

Lawson20%

10%

day. In addition, the measure is expected to reduce CO2 emissions associated with store deliveries by about 8%.
NC·GD Holdings
100%

100%

Nippon Cookery

Gourmet Delica

Establishing a refrigerated distribution model and expanding its coverage
We’re working to develop product supply structures that draw on new refrigeration and thawing technologies sothat we can offer a product mix that’s tailored to customer demand while reducing lost sales opportunities and losses
due to waste. A trial project has yielded a number of premium differentiated products made possible by refrigerated
distribution, including trout sushi.
Using AI to optimize store delivery routes
We’ve been using AI to optimize delivery routes since 2020 in an effort to reduce CO2 emissions. In OctoberStoresTypical approach(room-temperature products)

Vendor plant
Distribution center
Manufacture and shipment

Sales via product displays

Refrigerated distribution model(refrigerated products)

Manufacture and shipment

2021, we introduced store delivery routes created using AI for deliveries to stores served by our room-temperatureand frozen product distribution center in Gunma Prefecture (including about 400 locations), and simulations indicatethat those changes have lowered the number of delivery trucks by about 8% and CO2 emissions by about 7%. As of
July 2023, the area covered by the initiative has been expanded to the Tohoku, Kanto, Chubu, Kinki, Chugoku, andShikoku regions.

It’s difficult to accurately forecast customer demand when placing orders.
Customer demand > Order quantity: Lost sales opportunities
Customer demand < Order quantity: Losses from waste

Refrigerated distribution model

Customers

Enjoyment of products
Thawing

Sales via product displays
Freezing

Inventory can be managed at individual stores, after orders are placed.
Customer demand Timely thawing and sales via product displays->Fewer lost sales opportunities and losses due to waste

18

Sweeping Transformation Executive Committee

Transforming Profit Structures and Productivity

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Customer-centric Supply Chain Reform Project

Balancing supply chain optimization with measures to reduce food waste
Through a project centering on customer-centric supply chain reform, we are addressing food waste, one of
Lawson’s target social issues. We predict demand for each product based on individual store data such as weather
and sales, then work to optimize the entire supply chain by making product ordering recommendations based on
the predictions. We’re also striving to maximize franchise store profit by improving daily sales and gross margin.

Features of the AICO next-generation ordering system

Week

Day

Day

Product mix recommendations

Upgrade!

Upgrade!

New!

Product mix
recommendations

Order quantity
recommendations

Discount
recommendations

Which products
to include

Which products
to purchasein which quantities

Which products
to discount,and how much

The system will generate weekly product mix recommendations
based on each store’s customers’ purchase history, geographic
location, and sales display characteristics. The system will makepossible a product mix that better reflects each store’s characteristics
compared to the current semi-automatic ordering system.

Rolling out AICO, our next-generation ordering system, nationwide
We’ve worked to boost the precision with which stores place orders by relying on a semi-automatic ordering system

Order quantity recommendations(a system that uses AI to automatically calculate the optimal product mix and order quantities for individual stores based

The system will provide more precise recommendations based on progress made in AI and computation technology

on their own data), which we introduced in 2015. We completed an advance verification of a next-generation ordering

since the introduction of the current semi-automatic ordering system. It will provide daily recommendations concerning

system that updated the older semi-automatic system for some stores in the Tohoku region*1 in 2021 and for somethe product order quantities that will maximize profit after forecasting sales based on a broader range of previous datastores in the Tohoku region and Tokyo* from June through September 2022. Since that process yielded the envisioned

gathered from “own store” and “other stores” (including weather, inventory status, sales results for individual products, andbenefits in terms of sales, gross margin, and waste volume in target categories* , we will begin deploying the approachinterconnectedness of sales across products).

to stores nationwide around March 2023 under the name AI Customized Order/AI Consultant (AICO). By augmenting the

Discount recommendations

2

3

product mix and daily order quantity recommendations of the previous semi-automatic system with recommendations for

The system will recommend discounts from the perspective of maximizing profit by utilizing the same sales forecasting

discounts on streamlined system, AICO will help further reduce lost sales opportunities and food losses (due to waste).

logic as order recommendations. Although discounted sales of products whose expiration date is approaching traditionallyhas depended to a significant degree on each store’s experience, the new system will make it possible to avoid unnecessary

Vision for the new ordering mechanism

discounts while more effectively selling through inventory by using AI to recommend discount amounts and timings based

The AICO next-generation ordering system is designed to implement our individual customer and individual storefocused philosophy by reassessing how each franchise store’s sales displays should be configured based on a focus
on individual customers and providing AI assistance for ordering to realize that vision. Our vision is to support franchise
stores through AI-generated recommendations while respecting local decisions and activities. This fundamental
approach is reflected in the inclusion of the words “Customized” (emphasizing our commitment to tailoring advice toindividual stores) and “Consultant” (evoking a relationship characterized by close partnership) in the system’s name.

on individual stores’ daily inventory. In addition, by eliminating the need for experience, AICO will help boost the frequency
of discounts, lower the workload on managers and veteran crew members, and streamline store operations.
Boosting logic precision and establishing an optimal store guidance model
To prepare for the rollout of the new system, we will spend fiscal 2023 making additional improvements, developing structuresthat will allow owners and crew members to use it with confidence and peace of mind, and preparing for the deployment. As an
example, relating to discount recommendations, we’re planning to introduce a mechanism that will make it possible to easily
print discount stickers after reviewing recommendations from headquarters as a way to reduce stores’ operational workload.

Help creating the kind of sales displays stores want
Realizing our individual customer and individual store-focused philosophy
through AI support for local decisions and activities
How muchinventory should
we keep on hand?

What products
are needed
functionally?

Customized
Tailoring advice to individual stores

Through this and similar initiatives, we’ll work to maximize franchise stores’ profits while reducing lost sales opportunities andfood losses (due to waste) by helping individual stores create the kind of sales displays they want from both digital (in the formof the next-generation ordering system) and analog (through store guidance from supervisors) perspectives.

Consultant

Checking the store computer

Working in partnership with individual stores*1 Approx. 60 stores*2 Approx. 180 stores*3 Target categories: Cooked rice products [bento (boxed meals), room-temperature sushi, rice balls, and chilled bento boxed meals],bread products, noodle products, prepared foods, desserts, bakery items, etc.

Discount
operations

Checking the store
computer atrecommendation time

Affixing discount stickers to products
Checking
recommendation
data and printing
discount stickers

Checking productnames on stickers andaffixing them totarget products

19

Sweeping Transformation Executive Committee

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Transforming Profit Structures and Productivity / Transforming Worker Motivation

Transforming profit structures and productivity

Unified Use of Group Data Project

Striving to expand our business using data and media

Transforming worker motivation

Group Branding Project

Cultivating a sense of unity at the Lawson Group

Our drive to realize unified use of Group data augments initiatives conceived to increase the sophistication of

The Group branding project represents a Group-wide effort to build a brand that resonates with customers.

our domestic convenience store business, for example market analysis and product development, with an effort toWhen the project was launched in 2020, we defined the Lawson Group’s core value as “a challenger that aspires

expand the range of data subjected to analysis (data owned by Lawson Group companies, external data, etc.) and toto be useful to everyone” based on consumer research, employee workshops, and other input. This value aligns

enhance services that make use of data, with the goal of tapping new sources of revenue.

closely with how Lawson Group employees are working to realize the Group philosophy of “Creating Happiness andPrincipal initiatives include working to establish data-driven analytical techniques and efficient promotional

Harmony in Our Communities” in everyday life as in times of emergency.

models by improving operations through enhancement of the types of data we can collect, visualization of current

In fiscal 2022, we opened an official Lawson Group account on the information-sharing website note.com,

conditions based on data, and resolution of outstanding issues. We’ve also started using techniques and models

communicated information on the Group’s information-sharing website, offered training, and held networking events

found to be effective to provide services to outside entities, rather than dedicating them to internal use only.

in order to foster shared awareness of the core value while boosting loyalty. We also launched a Group branding pageon the Lawson Group’s official website in May 2023.

Proposals with individually tailored content anddelivery methods using Lawson’s data and location information

Snacks(Internal)

Official Lawson Group note account (in Japanese)
https://note.com/lawsongroup_note/
Smartphones• Past purchase data
• Past coupon issuance andusage data (by media)• Attribute data (external)• Location information

The Group branding project will continue to build Lawson’s brand by communicating information inside andoutside the Group about how the Group is embracing challenges on behalf of society and the communities it serves
through the Lawson Group’s official website and its official note account.

Analyzing dataassociated with individuals
to offer proposals
that meet their needs

We will also continue to strive to realize the Group’s philosophy while pursuing initiatives to foster a sense ofunity, boost employee and crew motivation, and foster shared awareness in order to increase employee satisfaction.
Group philosophy Creating Happiness and Harmony in Our Communities• Web browsing history data
• Weather information, etc.

Desserts

Real stores

Lawson Bank

UNITED CINEMAS NATURAL LAWSON

LawsonLAWSON TICKETLAWSON STORE 100 HMV & BOOKSIn addition to enhancing customer satisfaction by providing information that meets individual customers’ needs,interests, and preferences in an appropriately timed and suitable manner, we’re looking to boost headquarters
earnings and secure new sources of revenue by utilizing the analytical techniques and promotional models we’vedeveloped.

20

Domestic Convenience Store BusinessBusiness Portfolio

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

LAWSONBusiness environment

Growth strategies

In fiscal 2022, there was an overall upward trend in the flow of people despite repeated waves of COVID-19.
Diversification in customers’ lifestyles during the pandemic has led to increasing demand for daily-use products

Using the following strategies, we are aiming for growth and development which is “community-based × individual
customer and individual store-focused.”in convenience stores. In response to these changing needs, we have been undertaking store remodeling, with thetotal number of stores successfully remodeled between fiscal 2021 and the end of fiscal 2022 standing at 7,290.

1. Nationwide expansion of an area company system

In addition to increasing fixtures for frozen foods and daily foods, other features added via this store remodeling

In fiscal 2023, we introduced an area company

include offering Machikado Chubo in-store kitchens* and the introduction of MUJI products* in the hopes ofsystem for our eight areas nationwide, transferring

attracting business for daily necessities through specific brand demand and as a result of browsing. We also

authority and functions from headquarters to area

undertook product innovation to make our frozen foods and daily foods more user-friendly. As a result of thesecompanies in order to strengthen our systemic,

efforts revolving around store remodeling, daily sales improved by 1.9% in fiscal 2022.

thorough pursuit of customer value creation at lo-

11

Also, we began the Happy Lawson Project*2 in June 2022

cal stores, which are closer to the customer. The

in order to let customers know about the store remodeling,

company presidents who are in charge of eachproduct innovations, and other sales floor and productcompany will oversee heightened strategy imple-

changes. Thanks to the success of the store remodeling andmentation.

Hokkaido
Company

Kitakanto
Company

TohokuCompany

Chugoku-Shikoku
Company
ShutokenCompany

KyushuCompany

the Happy Lawson Project and other marketing measures,

Chubu
Company
Kinki
Company

2. Product strategy, sales strategy and store opening strategy

despite the flow of people not being back to pre-pandemic
levels, and excluding rice, noodles and soft drinks, which

We will work to thoroughly ensure the deliciousness of our products.

were greatly impacted by the reduced flow of people, sales

For our staple products, we will endeavor to enhance product strength while optimizing product offerings for each area,in all other categories for fiscal 2022 were higher than pre-such as by expanding availability of products which are locally produced for local consumption.

pandemic fiscal 2019 sales.

For our sales floors, we will ensure the breadth of our product lineup and volume of our inventory while ascertaining thedifferences in demand between regions and individual stores in order to reduce opportunity loss. Also, with the scheduled*1 Machikado Chubo in-store kitchens: 9,191 stores in total; MUJI products introduced: 9,621 stores in total (as of the end of February 2023)*2 A long-term marketing project to be implemented until 2025, which is the 50th anniversary of Lawson’s founding.
Will encompass a variety of initiatives, including a media strategy involving television commercials and other media promotion andproduct purchasing promotion efforts involving app coupons and other enticements.

Daily sales year-on-year

Segment profit
50

48.2

47.1
39.0
28.7

30

100

28.3

20

(Billion yen)

For store openings, we will look at area-specificstore openings with an emphasis on profitability.

99.5

101.1

100.1

For convenience store business that can be prof-

103.6

itable in areas with small commercial area pop-

92.7

ulations, we will continue to utilize a diversity ofstore-opening formats, such as opening stores in80

new locations, like those areas without any other

100able to customer needs, avoid products being out of stock and reduce waste loss.
demographic trends and, based on this, go about

120

40

phased introduction of the AICO next-generation ordering system from fiscal 2024, we will strive to be even more adapt-

2018

2019

2020

2021

2022

Fiscal
year

0
(%)

2018

2019

2020

2021

2022

Fiscalyear

store, opening stores in hospitals or in conjunction
with bookstores, or mobile sales.
21

Business Portfolio

Domestic Convenience Store Business

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Multi-format store development

NATURAL LAWSONLAWSON STORE 100

NATURAL LAWSON, which operates 131 stores nationwide (as of the end of May, 2023) as a nearby store sup-In response to changing customer needs, we have revamped the store concept for LAWSON STORE 100 (659 stores

porting “beautiful, healthy and comfortable lifestyles,” is focused on “supporting health and beauty,” “seasonality”

throughout Japan as of the end of May, 2023) to being a “Menu-Support Convenience Store” well suited for daily use

and “safety and reliability.” To realize these ideas, it offers a unique and carefully selected lineup of environmentallythat meets the growing demand for eating at home. With these stores we actively work to enhance the product appeal

friendly detergents, cosmetics, and other daily products, as well as delicious and healthy food products, while alsoof private brands in order to strengthen seasonal meal ideas that support the daily dining table of our customers, andoffering great value.

we promote brand strategies to encourage purposeful purchases reminiscent of LAWSON STORE 100 and allow us toGrowth strategies
Promotion of physical and mental well-being

be a Menu-Support Convenience Store that fully capitalizes on the advantages of being small stores.

By offering customers the excitement of discovering products they
have never seen before and the happiness that comes from finding

Growth strategies
Becoming a “Menu-Support Convenience Store” that offers daily meal ideas
As a convenience store which is responsive to customers’ lifestyles, particularly with regard to fresh foods andyour own, personal favorite product, we support not only the physicaldaily food items, we are focused on developing and im-

but also mental health of customers.

proving our ability to support the daily lives of people(1)We will pursue a greater variety of health-related themes than ever before.

through the “seasonal ideas,” “customer communi-

We will make an active effort to offer products suited to the diversi-

cation,” and “safety and security” we provide on thefying dietary habits and health concerns of customers.

sales floor. While keeping abreast of macro consump-(2)We will build up our fresh-baked goods bakery.

tion trends, such as population aging and the increase

We will deliver a menu of items which are deliciously baked in thein single-person households, we will utilize customer

in-store ovens found only at NATURAL LAWSON.

segment data to help us accelerate individual store(3)We will carefully select an assortment of products from all over the world and Japan that have scarcity value.

management together with franchisees, and thereby
increase market share within commercial areas.

Healthcare-focused stores and stores selling over-the-counter pharmaceuticals

Hospital LAWSON (in-hospital) convenience stores

Through partnerships with dispensing pharmacies and drug store chains, as well as training registered sales personnel,

Lawson has responded to hospital patients’ needs for convenience stores by opening

we are expanding the number of stores that sell over-the-counter pharmaceuticals and prescription drugs. We also continue

Hospital LAWSON stores. We are now No. 1 in terms of number of convenience stores in

to open healthcare-focused stores offering a wider assortment of cosmetics and daily-use products than ordinary Lawson

hospitals. Besides our regular products and services, Hospital LAWSON stores feature

stores. At some stores equipped with drug-dispensing pharmacies, we are trialing online drug administration guidance,

a lineup of products designated by hospitals, and we also cooperate with individual

prescription pick-up, and other services. In addition, from February 2021, at some of our stores handling over-the-counter

institutions to develop customized stores and services, such as mobile sales wagons.

pharmaceuticals, we started the first deliveries of pharmaceutical products using Uber Eats in Japan. This service handles

Recognizing the hospital as a community in its own right, we seek the daily(as of the end of May, 2023) 63 types of Type-2 and Type-3 OTC drugs, including cold medicines, eye drops and stomach

happiness of all hospital patients by giving careful consideration to their detailed needs.

medicines. The service is tailored to the needs of customers who want to purchase medicine without having to go out.
22

Business Portfolio

Domestic Convenience Store Business

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Lawson health initiatives

Product development targeting deliciousness and health

Initiatives on healthful foods

products that enable the intake of essential nutrients, such as vegetables and protein, while controlling sugar andIn product development, we have established 10 health themes based on our own standards and are creating

The Lawson Group is developing a range of initiatives
in response to increasing health awareness among

Healthful product sales trends

customers. In 2001 we launched NATURAL LAWSON,
which has served as a laboratory for developing health-

400

380

conscious products that have been sold at Lawson

300

300

stores nationwide.
Sales of these healthful products represented roughly
20% of our total food products in fiscal 2015, growing
to around 26% of total food products in fiscal 2022, and200

salt content. Ever since the COVID-19 infections, customers’ awareness of health and food has changed, and there

500

500

is a growing demand to not only cut calories and sugar for dieting but also to actively consume protein and dietaryfiber to maintain health.

400

For fiscal 2023, our aim continues to be to offer tastier food under the theme of “stay healthy while eating what330

you like.” We are strengthening our product focus in areas where customer need is particularly high, namely protein,dietary fiber, sugar and fat, and we are also pursuing easy-to-understand display methods on the sales floor, suchas by displaying nutrient content on packaging through the use of color-coded markings.

200

100

we are working to provide a wide range of products thatencompasses everything from onigiri rice balls, healthy
and functional baked goods and salads to candy, chilled

LAWSON Farm0

2015
(Billion yen)

Performance

2017

Performance

2021

2022

Performance Performance

2023
Goal forIn order to ensure a stable supply of domestic farm produce to Lawson Group stores,

2025
Goal for

we have established LAWSON Farm, a corporation eligible to own farmland, at 16 locations

drinks, processed foods and more.

nationwide (as of May 2023). LAWSON Farm employs the Nakashima method of farming,

Lawson offers approximately 3,000 healthful products (including national brand products) in a wide range of

which involves conducting soil diagnoses to develop ideal soil for growing crops before

categories, from dietary staples and famous KARAAGE-KUN Fried Chicken* to confections and drinks. Our target forplanting, and which supplies appropriate nutrition according to the growing conditions tohealthful product sales is to reach 500 billion yen in 2025, which is roughly 40% of the total SKU count.

produce healthy, delicious vegetables and fruits.

*The protein content of KARAAGE-KUN Fried Chicken (5 pieces) is approximately 14g.

Reinforcement of 4 themes

History of initiatives for healthful food

Stay healthy while eating what you like

From 2015

From 2018

From 2020

From 2021

More protein

More fiber

Low carbs

Low fat

Low-carb

From 2012
Dietary fiber

Vegetables

Vegetables

Low-salt

Low-carb

Protein

From 2022
Dietary fiber

Tasty products
providing an easysource of protein

Products providing
an easy sourceof dietary fiber,
which people often lackUse of bran(grain husks) to control
carbohydrate intake

Products providing
oils which are goodfor the bodyBran bread

Onigiri rice ballswith sticky barley

Smoothie
series*1

Motto! Yasai(“more vegetables”)
seriesCurry thatbrings out theumami flavorof its ingredients

Expand todietary staples

GreaterproteinGreater
dietary fiber*1 Packaging was changed
in fiscal 2022.

23

Business Portfolio

Domestic Convenience Store BusinessSupporting franchise store management and reinforcing trust

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Management Owner (MO) system

Lawson’s closest, most strategic partners are the franchise store owners and store crews who serve customers on the

Lawson has established the Management Owner (MO) system to strongly support franchise store owners

forefront in communities throughout Japan. Strengthening the trust between franchise stores and Lawson while striving

operating multiple stores through a reinforced partnership with the Company. The MO has made a substantial

to develop stores that serve as essential“hubs of refreshment in every community” for customers and their local areas, iscontribution to the progress of the Lawson chain as a whole, not only by enhancing the brand image of the Lawson

crucial to realizing the Group’s Corporate Philosophy: “Creating Happiness and Harmony in Our Communities.”

chain through development of model stores and sales floors, but also by exchanging opinions or proposing improved

Lawson is using digital technology to reduce the need for staff and labor in store operations, while headquarters

work procedures to headquarters management personnel as representatives of the franchise stores in their region.

contributes by supporting franchise store recruitment activities and optimizing their benefit packages, as well

As of the end of February 2023, there were approximately 200 MOs operating stores in various regions of Japan.

as by strengthening various initiatives and systems to encourage sound store management through clear, open
communication.
Also, in order to improve franchise
store profitability, we offer various
means of support, including support
for day-to-day sales floor development

Abundant
product
lineupFranchise
storesheadquarters of disposal costs in ordering, active introduction of energy-saving equipment, and improvement andAs for franchise contracts, in matching new aspiring franchisees with franchise properties, we generally takecare to present them with existing properties which have visible status of current sales and profitability, so thatby supervisors, partial assumption by
to facilitate product lineup strengthen-Considerations when entering a franchise contract

Socialcontribution
activities

New
services
development

Joint business operations

LawsonHeadquarters

Environmental
activities

they can feel reassured in concluding franchise contracts and getting involved in store operations. Meanwhile, upon
confirming their intention to undertake management, we proceed with contract signing and opening of the newproperty. Furthermore, in fiscal 2020, we created a new 5-year contract package as an option for those who feelless confident about signing up for the existing 10-year franchise contract.

simplification of store operations.

Recommending and supporting multiple store operations
Lawson recommends that its franchise store owners operate more than one store. This enables them to spreadthe risk posed by the emergence of new competing stores so that they can maintain more stable management thanwhen operating a single store, while expanding their business easily. A key aspect of multiple store operations is thedevelopment of store managers who can be relied upon to manage store operations in place of the owner.

Safe management starting from storeswith visible performance results
Existing
storesExisting
storesChangein thedirect store
management
formatOlder
franchise
stores(stores with
expiring
contracts)

Pre-existing
management baseConfirmation of the candidate’s intention to undertake
management before completing a new property contract
OPEN!

Start of new
franchise store
management

Existing
Headquarters franchise stores
Confirmation of Headquarters
Selection of
New property
intention
new store
contract
property candidates to undertake
management

Opening

In fiscal 2020, Lawson started providing support for store manager training, in which Lawson trainers visit
individual stores to provide on-the-job training (OJT) to develop the skills of franchise store managers. Furthermore,in fiscal 2023, Lawson is launching digital technology-driven, content distribution-based, on-demand training andonline store manager training which can be participated in from anywhere in the country. As of the end of February
2023, the multiple store operation ratio stood at 77.9%*, while the multiple store ownership ratio was 47.4%*.
*Excluding LAWSON STORE 100

24

Business Portfolio

FeatureDomestic Convenience Store Business

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Management Owner

Making the convenience store
into a desirable profession
CEO Active Co., Ltd.

Naomi Ishizuka

Naomi Ishizuka currently operates 25 Lawson stores within Shizuoka.
When the Management Owner (MO) system launched in 2010, she was oneof the inaugural MOs. Despite overseeing approximately 450 employees,
she is very fastidious about her stores and continues to make in-store
visits to help with operations. What is the appeal of being an MO and ofworking for Lawson? We talked with Ishizuka to find out what she thinks.

I want to show how I work to my employees“The difference, I feel, after becoming an MO is that I have a larger
perspective from which to see the store network and Lawson itself. WhenI was an individual store owner, my perspective was limited to just my
store and its environs, but, after becoming an MO, I work together with
headquarters in coming up with strategy for my entire area,” says Ishizuka.
Before she was an MO, Ishizuka ran three stores, and, before that, she
was a beautician.
“I became an owner for the first time in 1994. Before becoming anowner, I was the manager of a beauty salon. I started running a Lawson
store in order to put to use some land that my mother owned, but, when I
put others in charge of running it, things didn’t go well. So, I quickly quit
the beauty salon and took over running the Lawson myself.”25

Business Portfolio

FeatureDomestic Convenience Store Business

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Management Owner

When Ishizuka quit, the salon owner told her to make sure to work
the hardest of everyone around her. If she didn’t, the owner said, people
wouldn’t follow her. “I took those words to heart and started at the store

Products found seemingly everywhere,
presented in displays seen nowhere else

for owners to provide their input and feedback.
“We must make customers happy by providing them with products foundseemingly everywhere but presented in displays seen nowhere else. This iswithout ever having worked a cash register. Even now, I still do the cash

Store management is carried out strictly by the book. “Ideally, I would

where a convenience store manager shows his or her skill. When ordering,

register, stock the shelves, place orders and all the other tasks. I say the

tailor the entirety of my sales floors and products to suit each store, but

you decide what you think will sell and how much it will sell, lock it in for thatsame thing to every new Lawson franchise store owner who comes to mythat’s a luxury I just don’t have yet. This means, then, that the first thing to do

week and then think about how to sell it, how to do the POP display, etc. This

store for training. My feeling has always been, and will always be, that I

is to arrange each store according to a recognizably set pattern. Every detail,is what makes this business interesting.

want to show how I work to my employees.”

like what numbered hole to affix the product shelf plate to, is meticulously

It was in 2008, when Ishizuka was running three stores, that she wasinvited by Lawson Headquarters to apply to be an MO.
“Because things weren’t going how I was hoping at the three stores, I
lacked confidence and declined the offer; however, during owner training,predetermined.”“With the changes made to the sales floor as a result of the Sweeping
Transformation Executive Committee’s measures, I am thinking hard about

She does things this way because of the bad experiences she’s had

how to leverage them for business to produce quantifiable results. President

with employees quitting one after another when the responsibility for suchTakemasu says that ‘it is the actual store that is everything,’ and that isdecisions was left up to others.

absolutely true. I want to create a good sales floor and do a job worthy ofwe were told by Lawson Headquarters that ‘labor shortages will become“Running a convenience store is hard. You cannot expect a young person

increasingly serious in an era of population decline. That is why we need toto suddenly be good at it when he or she has no experience. They get

In the summer of 2022, Ishizuka began trialing something new. “Ibuild an MO system that will serve as a strong management foundation.’scolded when there is a lot of waste loss because of poor ordering, or when

am moving to ‘cross-functional’ operations, where ordering, sales floor

I couldn’t sleep that night. I was thinking about how, once the crew

there isn’t a crew member to fill a hole in a shift. This sort of thing makes

development, human resources development, and other duties traditionallymembers who had supported us ever since our founding got older, they

them lose confidence and they quit. I finally realized this after talking withhandled by store managers are made the full-time responsibility of others

would need some place to work as well as in the store. So, I returned to theemployees who had quit. That is why, now, I have people start with a set

who are good at them. There is no precedent for this; I am completely feelingstores, talked with the crew leaders about the extra responsibilities thatmodel and build up success using it. And once they learn a model, they can

my way as I go. Everyone has strengths and weaknesses, so isn’t it better

would fall to them if I try the new role, and they said they understood it. So

break it. It was by having people learn the model before they start making

to have a system which lets people make the most of their talents andI became an MO and started opening multiple new stores.”their own adjustments that allowed them to grow.”

passions? If I can get all of the roughly 450 employees that I am responsible

When asked what was of central importance to running a convenience
store, Ishizuka answered, “How to generate profit as efficiently as possible
in a store with limited floor space; the key is to use the product sales share
as a barometer of customer needs.”

that blue Lawson sign.”

for to make the most of their different strengths, the result will be truly
powerful.”
So, what is Ishizuka aiming to achieve in the future? “Making theconvenience store into a desirable profession,” she replies.

In the past, the number of display shelves exceeded the sales share for“I want the owners and crew members to feel pride in their work. In thedaily-use products, before she found the actual share was just a few percent,past, the job of a beautician used to be considered undesirable as well, but,

according to her. “With the introduction by the Sweeping Transformation

with the emergence of charismatic beauticians, it has been transformed

Executive Committee of new refrigerators and other equipment, we had ainto a popular profession. Image is important. That is why I have always

foundation of equipment with which to pursue store development whichcared about crew members’ appearance. Of course, this is a business, so it

is matched to sales share. We monitor the daily sales share and look foris important to make money. I make good money and drive a nice car, andhow to increase daily sales by even just 1,000 or 2,000 yen. I believe thatthe money my business makes I want to use to provide a work environment

headquarters thinks the same and is helping by changing the composition

where employees feel motivated, which includes pay and benefits, andof the sales floor. The area company system has also been started, which I

where the recently growing number of crew members from overseas feel

think will further accelerate the speed of decision-making and make it easierthat they can achieve the Japanese Dream.”

26

Seijo Ishii BusinessBusiness Portfolio

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Seijo Ishii

Business model and strengths

Growth strategies[Business model]

Accelerate store openings and explore new store opening formats

Seijo Ishii utilizes its own unique business model of “vertical

With an eye toward future expansion of the store network and developing new mainstay products, the new, in-integration of food,” in which all of its processes, from importing,tegrated central kitchen, the Yamato No. 3 central kitchen, went into operation in July 2022, doubling the existing

logistics, and manufacturing to wholesaling, retail sales, andmanufacturing capacity (equivalent to 400 stores). The company will continue to open stores in the Kanto region,

restaurant operations, are carried out in-house. By performing thewhile also strengthening its expansion into western Japan. In addition, it is tackling the challenge of opening storesproduct planning, manufacturing, procurement and sales functions

with new formats, such as the Seijo Ishii BAKERY specialty store opened in Osaka City in April 2023.

itself, Seijo Ishii is able to dynamically adapt to customer needs andtrends and the raw materials procurement environment.

Store locations[Strengths]

208 stores•Good brand strength backed by high-quality products and services•Varied store formats adapted for train station buildings, street-level stores, and shopping centers(As of the end of February 2023)•Unique product category composition with a high proportion of products from the company’s central kitchen
and original products

Business environment
With the increase in shut-in demand caused by fewer people going out and more people working from home

ChugokuregionYamato No. 3 central kitchen

during the pandemic, sales of fresh food, groceries, and confectionery, centered on large street-level stores,

10
8

7.4

*Total for direct management stores, franchise stores and Le Bar à Vin52

Strengthen e-commerce business

Number of stores
11.2

11.1

Efforts continue to strengthen e-commerce and promote last-mile business initiatives which use delivery services

220

8.3

193

200

201

208

such as Uber Eats. In March 2022, we jointly developed and opened the Seijo Ishii net supermarket on Amazon.
co.jp; in January 2023, a store was opened in the ANA Mall; and in May 2023, a store was opened in the JAL Mall.

183

6

146stores

22storesand dishes prepared in the company’s central kitchens.

10.3

Kanto
regionChubu
regiondemand, sales continued to grow as a result of the strong performance in sales stemming from new store openings

Segment profit

2stores

37stores1storeincreased significantly for fiscal 2020 to 2021. In fiscal 2022, despite some degree of rebound from the shut-in

12

TohokuregionKansairegion180*Amazon and Amazon.co.jp are trademarks of Amazon.com, Inc. and its affiliates.

173

4
160

2
0
(Billion yen)

2018

2019

2020

2021

2022

Fiscalyear

0(Store)

2018

2019

2020

2021

2022

Fiscalyear*Total for direct management stores, franchise stores and Le Bar à Vin52

27

Entertainment-related BusinessBusiness Portfolio

Lawson Entertainment

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

UNITED CINEMAS

Business model and strengths

Growth strategies[Business model]

1.Develop services which seamlessly provide both entertainment and travel tickets

Lawson Entertainment: Develop Lawson Ticket and Lawson Travel, etc., ticket business and HMV store andFor ticket business, we will put in place a platform through which both entertainment and travel tickets can be

e-commerce, etc., merchandise sales business. Acquire content through a variety of business, plan Lawson store

purchased and will develop it into a ‘one-stop shop’ where a person can, for example, organize his or her concert

campaigns and other marketing, and develop, manufacture, and wholesale original products.

tickets, means of transportation (plane, train, etc.), and accommodation.

UNITED CINEMAS: Develop cinema complex business, and peripheral business, such as advertising sales

2.Pursue development of entertainment-related products for new domains responding to market changes

using theater media.

In merchandise sales business, we will further build up the planning and development strengths which the Lawson
Group has cultivated and will expand the products and services domains handled by stores and e-commerce to new[Strengths]

domains, such as cosmetics and sports-related domains.

•Top-class sales strength in terms of ticket agency share

3.Develop entertainment complex business•Able to leverage the Lawson Group's comprehensive strength to procure content•Planning and sales strength with regard to products and services which fuse “reality and the Internet” and “goods
consumption and experience consumption”

In cinema complex business, we will provide value-added services using theater facilities, such as acoustic
sensory premium seating, to increase theater attendance numbers. In addition, we will broaden the customer baseby screening content other than movies. Also, we will strengthen merchandise sales, marketing, sales promotion,•Highly competitive thanks to active efforts to provide added value, such as with a 4D movie screening systemand other business, using theaters as a touch point with media and customers.

Business environment

Content holder

Amidst an accelerating trend towards digitalization caused by changing consumer habits during the pandemic,
we took full advantage of the Lawson Group’s strength to expand our ticket business and cinema complex businessby utilizing both real stores and the Internet. As a result, Lawson Entertainment’s ticket business in fiscal 2022 wasContent procurement which leverages Group strengths
Products and services planning, development, and sales

higher than it was for fiscal 2019. In e-commerce business, we expanded our merchandise and saw significant
growth in sales compared with fiscal 2019. Also, in the UNITED CINEMAS cinema complex business, the transaction
amount per customer increased due to differentiated theater management offering 4DX® (experiential viewing),
IMAX®.
Segment profit
6
5

5.3
4.4

3.9

4

UNITED CINEMAS
Customer Attendance (YoY)

250

150

2.2

2

100

1

191.7
167.1

200
150

3

0

Lawson Entertainment
Ticket Sales (YoY)

111.2
100

113.4
109.5

50

50

-0.2

-1
Fiscal(Billion yen) 2018 2019 2020 2021 2022 year

0
(%)

35.4
Fiscal2018 2019 2020 2021 2022 year

0(%)

Domainexpansion

Domainexpansion
Ticket business

Merchandise sales
business

Cinema complex
business

124.0125.5

Adapt to diversification of customer touch points

107.4

Customers

51.2

Fiscal2018 2019 2020 2021 2022 year28

Business Portfolio

Financial Services Business

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Lawson Bank

Business model and strengths

Numbers of ATMs by region

Growth strategies[Business model]

Numbers of Lawson Bank ATMs installed

1.Strengthen ATM business

13,509•Develop ATM business which has as its foundation the
Lawson Bank ATMs installed in Lawson stores and otherWe will work to increase the number of ATM users by expanding our
Hokkaido

658(End of March 2023)

locations in all 47 prefectures, as well as develop deposit,

Chubu

credit card, etc., retail business.
•Utilize the ATM network to provide services which connect
ATM users with partner financial institutions and cashless
operating companies.

2,084

KyushuTohoku1,148

Chugoku

1,333

937

Kanto

4,150

Okinawa

257[Strengths]

Kinki•Network encompassing 385* partner financial institutions and others

Shikoku

installed in locations other than Lawson stores. We will also implement
measures aimed at expanding usage of existing services, such as
ATM-based payment application recharging, overseas remittance card
handling, and ATM-based sales deposit services. In addition, we will work
to add new and expanded functions and services that will keep peopleusing ATMs.
We are considering linking our ATM Stamp Cards, which we have

2,330

been implementing since September 2021, with Ponta Card, and, by

612•13,509* ATMs installed in all 47 prefectures in primarily Lawson

partner financial institutions, as well as expand the number of ATMs

using Group data and with the agreement of ATM users, we will develop

stores, which are used by more than 3.6 billion people annually

measures that can be used on an ongoing basis.

•Systems and structures in place which enable ATM access 24 hours a day, 365 days a year
•Offers Lawson Ponta Plus credit card service in partnership with Ponta Card, which has a membership base of over 100 million members*As of the end of March 2023

2.Develop new retail financial services
We will work to deliver new retail financial services tailored to customers’ daily lives and aimed at “providing needed

Business environment

services when they are needed” in order to make Lawson Bank the “bank closest to customers” and to build up these retail

Because of the strict restrictions on people’s activities during the pandemic, customer numbers for Lawson stores

financial services as the “second pillar of profitability” after ATM business.

declined, which resulted in a drop in ATM usage. However, in fiscal 2022, the rebound in the flow of people and thedemand for going out helped to increase customer numbers in Lawson stores, which in turn increased the average
number of ATM transactions per day per machine to 52.6, an increase of 5.1 compared to fiscal 2019 before thepandemic. Also, with the growing adoption of cashless payment, there is increased use of Lawson Bank ATMs tocharge up payment applications using cash.
Segment profit

Average number of ATMs used (per machine per day)
3.8

4

3.0

3

60

2.9

48.9

52.6
47.5

2.2
2

1.7

Strengthen
ATM business• Expand partner
financial institutions• Strengthen function
and reduce cost

Build andstrengthen
ATM-related
business• Strengthen
financial last-mile
functions

Until nowDevelop new retailfinancial services“LAWSON BANK supports everyone’s
happiness and challenge,
giving consideration to people’s life”• Offer financial
services which suit tocustomer’s life

FY2023–

48.4
43.1

Value for customers
Lawson Bank offer

40

Offer convenience
to customers

Support customer’s
challenge

Support customer’s
dream

Offer security
to customers

10(Billion yen)

2018

2019

2020

2021

2022

Fiscalyear

0(Number)

2018

2019

2020

2021

2022 Fiscal
year

29

Overseas BusinessBusiness Portfolio

Introduction

Value Creation

Business model and strengths

Growth strategies (China)[Business model]

1.Accelerate store openings

Strategy

Sustainability

Corporate Governance

Finance / Company Information

As a franchise chain of Japanese-style convenience stores, we provide

We will train management personnel and utilize our base of know-how accumulated to this point to expand store

franchised store support and products and services that incorporate

openings into other areas, with the aim of having 10,000 stores by fiscal 2025. In China, due to differences in culture

Japanese know-how, develop and sell original products tailored to eachand economic level in different regions, we will use subsidiaries operating in each cultural area as the starting points fromregion, and oversee the supply chain.

which to open stores, and we will use area licenses, M&A, and other means to expand our business.

[Strengths]

Lawson store exterior in China•Know-how that has been accumulating since 1996, when we opened

Area
China
Indonesia
Hawaii (U.S.)
ThailandPhilippines

our first Japanese-style convenience store in China•High brand strength, with 20 out of 24 areas where Lawson stores
have been opened in China recognizing it as the “No.1 CVS that people
want to use*”*Based on consumer survey for the second half of 2022

2.Enhance product strength and pursue DX

When first store opened
July 1996
July 2011
July 2012
March 2013
March 2015

We will pursue insourcing of PB products and development of products which promote health. Also, in addition to
working on the sustained acquisition of out-of-store income, such as delivery services for which sales are expanding, we
will pursue digital transformation (DX), such as the development of group chat and SNS live-stream-driven marketing.

Business environment
In China, from fiscal 2020 to 2021, despite sporadic restrictions on activities due to the pandemic, we came up withstronger delivery, live commerce, etc., services that provided sales growth. In fiscal 2022, the business environment was
severe throughout the year as a result of large-scale restrictions on activities across all of China, such as the total lockdownof Shanghai; however, the flow of people recovered, as did sales, as cities one by one passed their peak infection point,
and, in March 2023, sales at existing stores had surpassed those of the previous year.
In regions other than China, since fiscal 2020, we have suspended business at stores, shortened store hours, andtaken other measures in response to the impact of the pandemic; however, the flow of people, as well as sales, have been

Growth strategies (Asia Pacific)

recovering as restrictions on activities are eased and abolished.
Segment profit

Number of stores

1.Accelerate store openings

China
Asia-Pacific3

Our goal is to open 3,000 stores by fiscal 2025. In order to further accelerate store opening, we will collaborate with

8,000

2.3

2

6,116

6,000

0.8

1

0.0

0

4,000

-1

-1.0

-2

2,000

-3

2018

2019

2020

2021

2022

Accounting Period of Overseas Business: January to December

2,170

2,892

Fiscalyear

0(Store)

2018

276

2,629

2019

5,641

3,256

2020

major cities outside of Jakarta in Indonesia, and undertake other forms of business promotion.

295

3,532

263

197
1,973

-3.0

-4
(Billion yen)

475

4,761

local leading companies, as well as pursue full-scale franchise expansion in the Philippines, expand store openings to

4,466

2021

Number of stores as of the end of December

2.Enhance product strength
We will expand our range of competitive, high value-added original products, focusing primarily on counter fast foods
and chilled products. Also, while continuing to incorporate products which are popular in Japan and China, we will2022 Fiscal
year

strengthen development of products which are tailored to each region; e.g., to its food culture.
30

Message from the CFO

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Restore pre-pandemic profitability levels as soon as possible
My primary mission is to return the company to pre-pandemic profitability levels at the earliest possible date.

We aim to disclose information
to meets market needs so that
we can be properly evaluatedWe launched the Lawson Group Sweeping Transformation Executive Committee in September 2020 and customers
were able to experience the changed sales areas through attractively remodeled stores and new products. The
Happy Lawson Project (nickname: Happy-Law ! ) was launched with the aim of encouraging customers to visit
Lawson stores more often. In addition to the success of these initiatives in the past three years, the post-pandemic
recovery of customer traffic at stores helped us to exceed our projected operating income, ordinary income, andprofit attributable to owners of the parent in fiscal 2022. We believe that being able to respond to changes in the
post-pandemic business climate through effective measures and achieving these better-than-expected results infiscal 2022 has paved the way to achieving the performance indicators of the Lawson Group Challenge 2025

Member of the Board
Executive Managing Officer,
Chief Financial Officer

initiative.
However, we have not yet achieved the level of market recognition we are aiming for, and we feel that we need toproactively approach all stakeholders to accurately identify their needs and disclose information to them. Through a

Masayuki Itonaga

commitment to information disclosure, our goal is to improve the market’s recognition of Lawson, its growth strategy,
and its prospects.

Net sales of all convenience stores (Consolidated)

Profit attributable to owners of parent/
Profit per share

Operating income (Consolidated)

Total assets/Net assets (Consolidated)
Total assets

Profit attributable to owners of parent (left axis)

2,545.4billion yen

Profit per share (right axis)

55.0 billion yen

Profit attributable toowners of parent
Profit per share

2,600

2,442.7

2,424.5
2,400

30

80

2,545.4

2,506.9

60

60.7

24.6 billion yen
246 yen25.5 255

62.9
55.0

20

47.0

2,349.7

Total assets

24.6 246

20.1 200

1,366.1billion yen
287.0 billion yen

Net assets
300

1,500

1,342.3 1,357.7 1,365.4 1,337.2 1,366.1

1,200
200

17.9 178

900

40.8

40

Net assets

600

8.6 86

10

2,200

100

20

0
(Billion yen)

2018

2019

2020

2021

2022

Fiscalyear

0(Billion yen)

300

2018

2019

2020

2021

2022

Fiscalyear

0(Billion yen)

2018

2019

2020

2021

2022

0

Fiscalyear (yen)0(Billion yen)

281.9

2018

275.3

2019

272.9

2020

278.4

2021

287.0

2022

Fiscalyear

31Message from the CFO

Introduction

Challenge 2025 performance indicators for fiscal 2025
Achieve ROE of 15% or higher and EPS of 500 yen or higher

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Capital expenditures and cost control

We believe that we must achieve ROE of 15% or higher and EPS of 500 yen or higher, which are the indicators ofCapital expenditures were 88.0 billion yen in fiscal 2022 and are projected to increase to 117.0 billion yen in

Lawson Group Challenge 2025. To achieve this, it is important that we steadily implement the Action Plan for Lawson

fiscal 2023. While store investment in fiscal 2022 was mainly through remodeling of existing Lawson stores onGroup Challenge 2025, which we explained at the fiscal 2022 financial results briefing.

a non-consolidated basis, store investment in fiscal 2023 will mainly consist of opening new stores overseas. In

The core operating profit target for fiscal 2025 is 100 billion yen or more (IFRS), which will not be easy toaddition, Lawson will continue to remodel existing stores on a stand-alone basis. The company has been installingachieve considering the core operating profit was 64.3 billion in fiscal 2022. However, the domestic conveniencefrozen food fixtures to expand its lineup of daily use products, and renovations in target stores were completed

store business achieved 3.6% year-on-year sales growth in 2022 despite the pandemic preventing a recovery inin fiscal 2022. From fiscal 2023, we will remodel our stores in a more environmentally friendly manner. We will

customer traffic.

replace aging refrigeration systems with equipment that reduces CO2 emissions and install solar power generation

During the three years through fiscal 2022, we invested mainly in store remodeling and other projects throughequipment to reduce utility costs.

the Lawson Group Sweeping Transformation Executive Committee, as well as in spreading awareness of the Happy

Lawson plans to increase marketing expenses by 10 billion yen in fiscal 2023 compared with the previous fiscal

Lawson Project! (Happy-Law!), which was launched in June 2022. From fiscal 2023 onwards, we seek to increase

year. In addition to our Happy-Law ! media strategy, these expenses are aimed at reducing missed sales opportunities

the effectiveness of these investments. For fiscal 2023, we plan to achieve year-on-year sales increases of 6% in thethrough expanded product lineups and realizing synergy by being rooted in "community-based x individual customer

first half, 2% in the second half, and 4% for the full year. We believe that we can achieve our core operating profit

and individual store-focused operations." This will achieve the goals of the Lawson Group Challenge 2025.

target of 100 billion yen or more in fiscal 2025 by reaping the benefits of our investments and steadily executing ouraction plans with a full-fledged recovery of customer traffic.

Challenge 2025 performance indicators for fiscal 2025 ROECore operating profit

100 billion

EPS (left axis)

15% or higher

600

64.0

400

60

Approx.
40%

8.9%
1.8%

(Billion yen)

2022

2023

*1 Operating income (Japan GAAP): 55.0 billion yen

Payout ratio

9.3
7.3

289

200

150

6.6
200

99.7 150
3.2

5

2025

Fiscalyear( Yen)

2022

2023

2025

0
Fiscalyear (%)

0
(%)

2018

2019

2020

1.3

2021

150

150

Fiscalyear

0( Yen)

100

60.8

1.8

2022

150

83.9

74.6

100

2.3
1.5

0

172.7

255

5

200

150 yen
60.8%

300

8.9

0.6
0

Dividends

10

296*2

Seijo Ishii businessEntertainment-related business
Financial services business
Overseas business

20

10

Payout ratio (right axis)

Dividends (left axis)

ROA
15

Dividends/Payout ratio

ROA

ROE

500 yen or higher

12.4

80

40

ROE

ROE (right axis)

yen or more

Domestic convenience store
business

64.3*1Return on equity (ROE)/Return on assets (ROA)

15% or higher EPS 500 yen or higher

Basic earnings per share (EPS)/
Return on equity attributable to owners of parent (ROE)

Approx.
60%

100

We will significantly expand our product lineup and the volume of inventory so that we live up to customer
expectations all over Japan.

2018

2019

2020

2021

2022

Fiscal
year

50

0
(%)

*2 EPS (Japan GAAP): 246 yen

32

Message from the CFO

Choose capital policies conducive to growth

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

The value of dialogue with stakeholders

Growth and capital profitability are the criteria for judgment of our capital policies. We make concentrated growth

In early May, We went to Europe on our first overseas IR trip in three and a half years. We visited 10 companies ininvestments in our core domestic convenience store business and at the same time consider appropriate capital

three days and were able to see firsthand what investors want, and I believe that we were able to conduct extremely

policies that will be considered with a view toward industry reorganization and M&A. While always striving to balance

fruitful discussions. We will continue to actively seek opportunities to meet directly with investors in Europe, North

capital policy and shareholder returns, we aim to achieve the performance indicators of the Lawson Group Challenge

America, and Asia.

2025 by boosting the growth and corporate value of the Lawson Group as a whole.
Seijo Ishii’s application for listing was also part of our capital policy for the growth of our group companies. In lightof the market environment, we withdrew the application for listing in December 2022. However, we will continue tosupport that company’s growth while studying capital policies conducive to growth.

In the convenience stores business, everyone involved is a customer. This includes investors, business partners,
franchise stores, and myself. Therefore, my style is to talk to all stakeholders face-to-face as much as possible.
Lawson has voluntarily adopted International Financial Reporting Standards (IFRS) for its consolidated financial
statements for the fiscal year ended February 28, 2023, replacing the previously adopted Japanese GAAP. The main
reason for this is that we believe that disclosing financial information in accordance with IFRS—the global standard

Increase shareholder returns
We have decided to change our shareholder return policy from fiscal 2023. Our former policy, which began in
fiscal 2019, was to pay dividends with a target consolidated payout ratio of 50% in addition to the minimum annual

for accounting—will enable overseas investors, who account for about half of our shareholders (excluding stableshareholders), to make more accurate judgments.
IR Activities (Fiscal Year Ended February 28, 2023)

dividend of 150 yen per share. We will boost shareholder returns toward fiscal 2025. Specifically, the minimum

Financial results briefing, financial results conference callannual dividend per share has been set at 200 yen for fiscal 2023, 225 yen for fiscal 2024, and 250 yen for fiscal

Dialogue with investors

2025, and actual dividend paid each year will be either this amount or a consolidated payout ratio of 50%, whicheveris higher. In addition, we will consider additional returns, with a target total return ratio of 70% for the cumulative

IR seminar (investor briefing)

6 times
Approx. 200 times
2 timesperiod from fiscal 2023 to fiscal 2025.
The background for strengthening shareholder returns is the improved profitability of the headquarters andfranchise stores. We reduced the dividend in fiscal 2019 due to the need to strengthen support for franchise
stores suffering from higher labor costs caused by labor shortages. Since then, as a result of efforts to improve theprofits of our franchisees under our franchise store profit-focused management policy, despite the negative effectsof the pandemic in fiscal 2020, we were able in fiscal 2021 and 2022 to maintain franchisee profit per owner at
a higher level than it had been before the pandemic. The measures we have taken over the past several years,
including launching the Lawson Group Sweeping Transformation Executive Committee, have been successful andthe profitability of the headquarters and franchise stores has improved. This led us to decide that the time has cometo strengthen returns to shareholders and increase dividends.

33