Summary of Results for FY2018

Lawson, Inc.
April 12, 2019

Copyright (c) 2019 Lawson, Inc. All rights reserved.

Financial Results for FY2018
Satoshi Nakaniwa
Executive Managing Officer
Chief Financial Officer
Lawson, Inc.
Copyright (c) 2019 Lawson, Inc. All rights reserved.

Consolidated Financial Results for FY2018（Billions of yen）

FY2017
Act
65.8
65.1
26.8

Operating profit
Recurring profit
Net Profit

FY2018
Act
60.8
57.7
25.5

Diff.
-5.0
-7.4
-1.2

V. Plan
+0.7
+0.7
-2.4

99.5%
31.2%

-0.5%pt-0.2%pt

+667

-133

(Non-consolidated %)Existing store sales
Gross profit margin

100.0%
31.3%

No. of CVS stores

13,992

14,659

1. Consolidated operating profit : 60.8 billion yen(1) Fell While gross operating revenue increased on higher store numbers, operating profit dropped onincreased SG&A expenses including higher franchisee support costs, investment in next-generation
systems, and costs related to the launching Lawson Bank.
(2) Rose v. plan: While existing store sales fell YoY and the gross profit margin fell short of plan, operating profit
came in above target on cost-cutting efforts.

2. Consolidated net profit : 25.5 billion yen

・Reason for falls YoY and v. plan: Higher store-related impairment losses, etc.

3. Existing store sales : 99.5%
・Number of customers : -2.3%
Copyright (c) 2019 Lawson, Inc. All rights reserved.

Spending per customer : +1.8%
3

FY2018 Review
FY2018 operations & progress
Next
generation
system【New POS cash
registers】

Newbusinesses•

Completed introduction of new POS cash registers into
all stores designed to make instore cash management
more efficient.

•

Costs within budget thanks to efficiency gains inbusiness processes achieved on introducing new POS
cash registers to all stores.

•

Lawson Bank started financial services for customers in
October 2018, after receiving banking licence in August.

•ATM usage figures came in short of plan, but operating
profit was roughly in line with plan thanks to costcutting initiatives and other factors.

•

Lawson parent: The YoY rise in average customer spend
was unable to cover the fall in customer visits in existingstore sales, and, as a result, the gross profit margin alsocame in below plan. However, operating profit exceeded
expectations thanks to our cost-cutting drive.

【Lawson Bank】

CVS etc.
•

Evaluation

○

△

△

Operating profit to plan at Seijo Ishii and entertainment
business (Lawson Entertainment, United Cinema) was
almost as planned.

Copyright (c) 2019 Lawson, Inc. All rights reserved.

4

Consolidated Operating Profit for FY2018
FY2017
Act（Billions of yen）
Operating profit

Act

65.8

Plan

YoY in yen

*

60.8

Act

FY2018
Diff.
- 5.0

+0.7

Diff.

Next generation
systemApprox. -5.0 bil.

Approx. -4.0 bil.

Approx. +1.0 bil.

New businesses

Approx. -2.0 bil.

Approx. -2.0 bil.

as planed

CVS etc.

Approx. +1.0 bil.

Approx. +1.0 bil.

as planed

Approx. -6.0 bil.

Approx. -5.0 bil.

Approx. +1.0 bil.

Total

V. Plan* Revised on Oct. 12, 2018

※Figures rounded to the nearest 0.5bil yen for clarity of display
Copyright (c) 2019 Lawson, Inc. All rights reserved.

5

FY2019 Forecast（Billions of yen）

FY2019Forecast

Diff.

60.8

±0

Lawson parent（Note）

45.3

-0.4

SEIJO ISHI CO., LTD.

8.5

+0.3

Entertainment business(Lawson
Entertainment, Inc. United
Cinemas Co., Ltd. )

5.1

+0.1

18.0

-7.5

Consolidated operating profit
Major companies

Consolidated net profit
Dividend per share

150 yen（FY2018:255 yen）

（Note）

・Existing store sales ：100.5％（YoY＋1.0％）
・Gross profit margin ： 31.4％（YoY＋0.2％P）
・Store number：Store opening 700 Store closure 700
Copyright (c) 2019 Lawson, Inc. All rights reserved.

Net store numbers 0
6

FY2019 Consolidated Operating Profit（100 million yen）

approx.
+20

Consolidated
subsidiaries

of closing
approx. Impact
low-profit stores
+40

608

Positive impact ofimproved daily
sales and grossprofit margin

approx.
-40
IT costs(replacement of
store computers,
etc.)

approx.
-20
Variousmeasures*＊【Main measures against labor shortage】

608

・Replacement of Machi café machines(Introduce self-service Machi café machines)
・Expand stores with smartphone payment options
・Introduce self-service FF counters, etc.

FY2018
Consolidated
Operating profit※Figures rounded to the nearest 0.5bil yen for clarity of display

Copyright (c) 2019 Lawson, Inc. All rights reserved.

FY2019(E)Consolidated
Operating profit
7

FY2018 Review
FY2019 Initiatives
Sadanobu Takemasu
President and CEO
Representative Director
Chairman of the Board

Lawson, Inc.
Copyright (c) 2019 Lawson, Inc. All rights reserved.

1000-Day Action Plan Overall
Become an essential part of our communities
Build Next-generation LAWSON CVS model
Stronger evening/night-time ranges, Stronger everyday living support
Stronger
products
DigitalStrongerstore displays
Strongerfranchise
supportStronger
operation of new
openings
Analog

Revolutionize our operational system
Challenge for future growth opportunities and revolution

Copyright (c) 2019 Lawson, Inc. All rights reserved.

9

1000-Day Action Plan Overall
2018

Supporting everyday life,
Alleviating labor shortage

2017

Stronger evening/nighttime ranges

Fuller product ☆Change orderrange
cut-off times
・Strongercore
Better store display☆Lawson
CVS, rice, FF
environment
products
Fresh Pick
Improved
・New living ・Machikado Chubo
launch in Tokyo
Stronger ordering accuracy support

2016

2015

livingsupport☆Introduce Expand daily products, ☆New tablets
frozen foods
Reduce store
SA system ・Expand SKU
processes& Kanagawa

3,000→3,500SKU

Labor
shortage
response

Store recruitment support

Labor-saving
trials・Set up “LAWSON STAFF”

・Auto registerRegi-robo
・RFID, etc

Year 0Year 2

Copyright (c) 2019 Lawson, Inc. All rights reserved.

Year 1☆Automatic change
dispensers
New POS cash
registers
Smartphone
payment

Year 310

Current Labor Shortage Initiatives, Future Strategy* Saving time per day
2015～
Semi-automatedordering system +planned ordering
2017～
Introduced new
Machikado Chubo
operation

2018
POS cash registers
with automaticchange dispensers

2017

2.0 hours/person
1.5 hours/person（standardize operations,etc.）

1.5 hours/person（checking register account）



Tablets

2016
Established“LAWSON STAFF”
agencyLAWSON
Smartphone
cash register（2018～）

Improve store
productivity by managing
work schedules, counter
FF production

Usage increased approx.
20 times compared to preowner support system.
Covers over 200 shifts perday Takes ¼ of time required
for regular cash register
payment. Currently
operational in 103 storesnationwideUsing digital technology to reduce labor time and personnel
July 2019～
Unmanned store trial
Target: 5 hours/person/day
Trial stores：2 (scheduled)
Opening hours: Unmanned frommidnight to 5am (some products notavailable during those hours)
Payment : Smartphone, self cash register
Store entry: granted via Lawson app
Copyright (c) 2019 Lawson, Inc. All rights reserved.

2016～
RFID proof of concept
・ Fully automated self
checkout counters“Regi-Robo”
・ Walkthrough payment
using RFID electronictags
11Impact on Customer Visits Daily Sales

Stronger evening/nighttime product strategy has increased number ofpotential target customers.
However, dampened daily sales of core CVS customer layer.

Daily sales-0.5%

Customer visits -2.3%（-2.3% v. plan）
Favorable expansion ofpotential target
customers(men/women over 50)
Customer numbers YoY

Approx.+4％
Copyright (c) 2019 Lawson, Inc. All rights reserved.

Customer spend +1.8%（+1.0% v. plan）

CVS core customers(men/women in 30s, 40s)

Broad age and customer range

Customer numbers YoY

Customer numbers YoY

Approx.-3%

+1.8%
12

Review of Evening/Nighttime Initiatives
Large growth in better evening/nighttime ranges,
initiatives starting to bear fruit
Morning, lunchtime

Evening, nighttime■ Stronger evening/nighttime products■ Stronger evening/nighttime products

104.9％
101.5％
100.3％+1.2pt.

取り組み前
Before strengthening
After取り組み後
strengthening

101.3％+3.6pt.

取り組み前
Beforestrengthening After取り組み後
strengthening※Strengthening the third evening/nighttime delivery: before period (2018/5/10-6/4), after period (2018/６/5-2019/2/28）※2018 stronger evening/nighttime categories: boxed meals, rice-balls/sushi, sandwiches
Hour : morning, lunchtime (6AM~4PM)
evening, nighttime (4PM~5AM)
Copyright (c) 2019 Lawson, Inc. All rights reserved.

13

FY2019 Initiatives

Copyright (c) 2019 Lawson, Inc. All rights reserved.

Lawson’s Broader Environment
Market movements
2019 May: change of imperial era,
June: Women’s Soccer World Cup,
September: Rugby World Cup
October: rise in consumption tax
2020 Tokyo Olympics
2025 Osaka World Fair

Labor shortage

Expanding
online sales

Personnel costs

Increasingly
severecompetition

Copyright (c) 2019 Lawson, Inc. All rights reserved.
Copyright (c) 2019 Lawson, Inc. All rights reserved.

Promotingfemaleparticipation

Health-conscious
consumers

Ultra-ageing
society

Reducing
plastic
use

Reducing
food
waste
15

Summary of FY2019 Plan In light of tight labor, falling franchisee store revenue,
and increasingly severe operational environment,
focus on counteracting labor shortage in FY2019 byaiming to create stores that all customers will enjoy.
 Create a sturdy cost structure, systematically close
low-profit stores, promote environment-conscious
reductions in food waste.
 Deepen our focus on new store quality. Plan to open
700 stores, close 700 stores for a net gain of zero.

 Grow as a consolidated Group supported not only by
Japanese convenience store operation, but by otherpillars such as Seijo Ishii, entertainment, financial, andinternational operations.
Copyright (c) 2019 Lawson, Inc. All rights reserved.

16

FY2019 Plan
（100 million yen）

FY2018Actual

FY2019Plan

YoY

Non-consolidated
operating profit

457

453

-4

-1.0%

Consolidated operating
profit

608

608

+0

±0.0%

Consolidated recurring
profit

577

545

-32

-5.5%

Consolidated net profit

255

180

-75

-29.6%

Existing-store sales

99.5%

100.5%+1.0%

Gross profit margin

31.2%

31.4%

+0.2%

• Expect consolidated operating profit remain flat.
• Improve franchise store profits by closing low-profit storesand promoting store relocation. However, store closures
expected to result in a fall in recurring and net profit.
Copyright (c) 2019 Lawson, Inc. All rights reserved.

17

Lawson’s Ultimate Aim

Become every customer’s
No.1 recommended brandThreepromises ①
Most delicious
taste

Three
promises ②
HumankindnessThreepromises ③
Environmental(Machi)friendlinessInspire franchise stores and employees to work

Copyright (c) 2019 Lawson, Inc. All rights reserved.

18

Improving Franchise Store Profits
Franchise store job satisfaction & pride
 Reduce personnel costs

More stores with self cash register,smartphone cash register Reduce disposal losses/Create lean no-

waste operation

 Review new store openings

Promote franchise store relocation

 Aim to introduce new franchise contract
package this fall
(Promote multi-store management)

Realize better profits for franchise owners
Copyright (c) 2019 Lawson, Inc. All rights reserved.

19

Transforming Our Stores : Labor-saving, Franchise support
Introduce labor-saving cash register and other tools to alleviate
the most time-consuming instore processes
Self cash register

Gradualintroduction
from March

Cashlesspayments
only in self
cash register mode

Copyright (c) 2019 Lawson, Inc. All rights reserved.

LAWSON Smartphone
cash register

Expand to 1,000
stores in FY2019

Help yourself FF
counters

Plan to expand fromnew stores(just experimenting)20

Transforming Our Stores : Labor-saving, Franchise support
Greatly improve work speed by boosting processing
speeds
New storecomputers

Introduce new store computers
into all stores by June 2019
View combined
display of all store
information(owner portal)

Option to remotely operate
other store computers(Support multiple-store
owners for remote login)
Copyright (c) 2019 Lawson, Inc. All rights reserved.

21

Crew Armies to Combat Labor Shortage
Expand Corporate award
systemIntroduce new systemfrom June
Start experiment of
new shifts from June

・Increase potential use

RetainHireeducateTraining tools for
employinginternational staff

Stronger initialtraining

・Employment guidebook
・Vocabulary in
4 languages

・Orientation video
・International staff
training guidebook

・LAWSON STAFF
Copyright (c) 2019 Lawson, Inc. All rights reserved.

・Crew sharing
・Transform to shorter
shifts
Improve
employment
homepage・New store computer
operation manual222019: Review Store Openings
 Rising franchisee store’s costs(Rising personnel, utilities costs)

Stricter new store opening criteria
Promote relocation of low-profit
storesEncourage multiple-store owners

Open Close Net increase Plan

（Stores）

Open

1500

Close

Net increase

881

1000

625
500

667

716

450

700

Plan to a
Net gain of zero0

FY2014-500

FY2015FY2016FY2017FY2018FY2019forecast

700

-1000
Copyright (c) 2019 Lawson, Inc. All rights reserved.

23

Lawson’s Multiple Store OwnershipFranchise stores, HQ to work together to create an even better LawsonSingle-store owner⇒Multiple-store owner⇒ Management Owner
Start as single-store owner, HQ support
multiple-store management businessexpansion
Management Owner to join in
management planning in strong partnershipwith HQ as a business manager
Multiple-stores
Multiple-storesSingle store

1 store manager
Average crew no. for 2 stores
Approx. 30

3 store managers
Average crew no. for 4 stores
Approx. 60

Consider introducing new FC
contract package

・ Designed for multiple-store
management
・ Consider appropriate store
support costs etc.

Operation management as

Management Owner
Store consultant (SC)Visits and guides each store

Average crew no.
Approx. 20

Copyright (c) 2019 Lawson, Inc. All rights reserved.

24

Encouraging Multiple-store Owners
 Multiple-store owner ratio（％)  Approximately 70% of
stores are operated bymultiple-store owners

40.5% 40.8 %42.3 % 42.8 %Companyoperated
stores,etc.

Single-store
Owner
approx. 3,700

storesapprox. 13,800 stores

FY2015 FY2016 FY2017 FY2018

Multiple-store Owner
approx. 9,500 storesincl. Management Owner
approx. 2,000 stores＊As of February 28, 2019
＊Convenience Store Business in Japan
except for LAWSON STORE100.
Copyright (c) 2019 Lawson, Inc. All rights reserved.

25

Direct Communication with Franchise Stores
Create STORES with FREQUENT contact over MANY YEARS
Encourage discussion between franchise stores & HQ
(incl. senior management), and among franchisees

FC owner welfare, board meetings (twice/year)FC owner women’s section (twice/year)MO general meeting (annual), MO board meeting (twice/year)

Area meetings (monthly in each area) (3,045 in 2018)



Lawson seminars (twice/year)Direct line to president (as needed)

Set up April 2019: Lawson Franchise Store
Advisory Committee
A new venue for airing views on Lawson HQ management,
policies, and potential improvementsfrom the franchise store perspective.

Copyright (c) 2019 Lawson, Inc. All rights reserved.

26

2019 Three Pledges of Product Sales

Business basics: “3 pledges”

Stronger focus on S & C

Q ×S ×C

Quality

Copyright (c) 2019 Lawson, Inc. All rights reserved.

ServiceCleanliness

27

Review Lawson Store Format
Stores we would recommend to customers
Stores customers would recommend totheir family & friends

No adult
magazines
Copyright (c) 2019 Lawson, Inc. All rights reserved.

Clean toilets

Heartygreetings
28

Transforming Products: FY2019 New Internal Organization
Concentrate setting, implementation of marketing strategy and Japan CVS sales plans
President be also a Marketing Strategy Division Director to operate a swift PDCA cycle

President
Marketing Strategy Dept.

Store
Operations
Division

Corporate
Sales andStore
Development
Division

ReadyMade
Foods
Division

Dry Foods
andHousehold
Goods
Division

Separate Merchandizing Division into two
Reorganized as two specialist
producing organizations

Copyright (c) 2019 Lawson, Inc. All rights reserved.

Sales
Promotion
DivisionEntertainme
nt Business
Division

Financial
Services andDigitalBusiness
Division

Set up a Lawson Way Advisory Board(from March 2019)
A venue primarily for influential women outside
the company to debate and confirm Lawson
strategy and tactics, products and services,
QSC, store management, etc.
29

Transforming Our Products
The Three Lawson Promises
Three promises ①
Most delicious taste

Three promises ②
Human kindness

Stronger Private Brand

Change nutritional
information labeling,
reduce salt & additives

Three promises ③
Environmental(Machi) friendliness
Reduce food waste
and plastics use
・No straw
・Paper cups

Stronger frozen foods

Low salt

Low-carb

Low additives
Copyright (c) 2019 Lawson, Inc. All rights reserved.

30

Lawson Group Overview
Finance

Healthcare

Entertainment

Japan
CVS
International
operation
Digitaltechnology

Copyright (c) 2019 Lawson, Inc. All rights reserved.

China
Shanghai, Chongqing, Dalian,Beijing, Wuhan, Nanjing, Hefei

SE Asia
Indonesia, Thailand,
Philippines

31

Seijo Ishii: For Future Sustainable Growth
Strengthening
foundation for growth Polish product-focused existing stores, andbusiness operations
 Promote growth with new store openings

Brush up existing operations, organize infrastructure Expand central kitchen
 Consider potential for eatingout/eating- in operations
Copyright (c) 2019 Lawson, Inc. All rights reserved.

32

Entertainment Business: Create an Overall Entertainment Company

Entertainment
Business Division

Triplestrategy① Strengthen
existing business・No.1 in entertainment distribution,customer satisfaction② Pursuesynergies

・Effective resource use across Group③ Improve
productivity

・Improve profits, reform processes,
exploit IT tools

Create a one and only comprehensive entertainment conglomerate!

Copyright (c) 2019 Lawson, Inc. All rights reserved.

33

Financial Business: Respond to Cashless Society Lawson Bank to serve as a part of social infrastructure, andyour nearest bank

Expand ATM
operation
 More ATMs, more ATM usage
 Install ATMs outside Lawson stores

Cooperate with
regional financial
institutions
 Joint ATMs, ATM
management

Promote credit card
operation
 Ponta points program Broader settlement options

Respond to cashless needs
 Working to provide a strong settlements platform
Copyright (c) 2019 Lawson, Inc. All rights reserved.

34

Strengthening Our Digital Marketing

Smartphone
advertisingLINE@

Directregistercoupons

Smartphone
coupons

Smartphone
cash register

Receipt
coupons

Renew Lawson
app

Copyright (c) 2019 Lawson, Inc. All rights reserved.

35

Expand Intl. Operations: Protect Future Profits
 Establish profitable model across international operation
 FY2021: Approx. 5,000 stores

International operation profit/loss
FY16

FY17

FY18 FY19 onward

China
Acquire scale through regional
franchise development inShanghai, Chongqing, Dalian,Beijing, Wuhan, Nanjing,
Hefei, etc.

Japan

Southeast Asia
Establish a profitable businessmodel and expand store network
in Indonesia, Thailand,
Philippines, etc. Develop
win-win partner
relationships

Copyright (c) 2019 Lawson, Inc. All rights reserved.

■ Shanghai ■ Rest of China ■ Thailand + others

FY2018
Shanghai, Dalian
operations turn a profit

36Dividend Policy (1)Dividend per share: FY2019 150 yen (FY2018 255 yen)
FY2019 Dividend Policy
Reward shareholders by offering a minimum
stable dividend of 150 yen per share
dividend and targeting a consolidated
dividend payout ratio of 50%.

ROE

16.1%
13.0%

13.5%
12.0%

9.3%
9.7%
6.5%

（Yen） Annual
１株当たり年間配当金（左）dividend per share (LHS)

300

Dividend
Payout (RHS)
配当性向

120%

250

100%

200

80%

150

60%

100

40%

50

20%

0

0%
FY13 FY14 FY15 FY16 FY17 FY18 FY19

Copyright (c) 2019 Lawson, Inc. All rights reserved.

Lawson management places great store on
returning a portion of our profits to ourshareholders, and has paid out stabledividends on an annual basis.
While our fundamental stance has notchanged, moving forward, we have decided to
introduce a consolidated dividend payout ratio
to make our profit-sharing stance even clearer
for our shareholders, and to ensure we pursue
a strategy that both maintains financial
soundness and returns an appropriate portionof profits to our shareholders that directlyreflects corporate performance.
37

Dividend Policy (2) Helping franchise store owners deal with labor shortage
and rising personnel costs is an urgent task.
 The mutual benefits generated by ongoing franchise store
support measures will lead to higher corporate value.
 Our commitment to providing shareholder returns
unchanged.
 Achieve swift increase in dividend following profit recovery
from FY2020 onward.
 Maintaining higher-than-industry-average shareholder
returns with a dividend payout ratio of 50%.
Reviewing our dividend level is a difficult but necessary choice
if we are to continue our ongoing franchise store support
measures. We will seek to increase the dividend as soon as
possible by securing a recovery in franchisee and company profits
Copyright (c) 2019 Lawson, Inc. All rights reserved.

38

Establish an SDGs Committee
Board of Directors

Board of Auditors

President

Management
Conference

SDGs Committee
Main Board Members

Secretariat

Based on our corporate mission “Creating Happiness andHarmony in our Communities”, the Lawson Group strives
to realize our three promises and achieve sustainablegrowth with due consideration of ＳＤＧs.
※Three promises→Most delicious taste, human kindness,environmental (Machi) friendliness
Copyright (c) 2019 Lawson, Inc. All rights reserved.

39

Lawson Social, Environmental
Activities



Initiatives so far
沿革 （ローソンのESG取り組み）

Set up
LawsonGreen
Streets
Fund
1992

2007

Reused plastic bottles
Introduced uniforms
Individual StoreCampaign
Food recycling
experiment
1997

1996

1994

1999

Kobe
Earthquake
Donation fund
1995

Started distribution eco
bags
Opened Happy Lawson

Stoppedincludingchopsticks
in boxed
meals

2001

2004

unched Arakawa Clean Aid

SEJ2014、FM1998
certification
Copyright (c) 2019 Lawson, Inc. All rights reserved.

Set up Support Your
Dreams fund2016
Installed solar
panels in 2,000
Concluded a healthstorespromotionagreement with2011
local governments
2013

1998

Began recycling ISO14001
waste products certification(glass/plastic bottles,
cans)

Stronger protectionof personal information

Resilience testingcertification

2000
Mt. Fuji
Forestation
Campaign

2014
Selected as
nadeshiko brand2008(femaleadvancement) 2017
Set own action
5 consecutive
targets for reducing
Healthyears
CO2 emissions
Management
2012
White 500
2006
company
Started selling
Agreement withbran bread
Ministry of Environment
Set up Single
Launched
Started recycling
ParentFamilymobilewaste oil
Supportcatering
in all stores
Scholarship Fund

2003
Comprehensive
regional
agreement with
Wakayama
Prefecture
Reduce foodadditives

40

Reducing Plastics, Food Waste
Less food waste

Lower plastics use(%)

Targets to reduce plastic
for private brand products
and consumables

100

20% down

30% down(%)
120

Food waste, gross profit in the FF
category (March 2019)+3% YoY

100-18% YoY

80

0
100

FY2017

FY2023

FY2030Single-use plastic
30% down bag reduction target

50%down

60
FY2018
Food waste

FY2019Gross profit

Create a no-waste, sell-all operation
0
FY2017

FY2023

FY2030

Review single-use plastic bags, boxed foodwrapping

2030 targets: Reduce plastic by 30％ (plasticbags by 50%) v. 2017 levels.
Copyright (c) 2019 Lawson, Inc. All rights reserved.

Control waste through minute control ofproduction volumes and sell-all discounts on
room-temperature fast food packs. Pursue
activities to promote sales permission (gasreplacement, etc.)41Corporate Governance
Strengthen independence withhigh ratio of external directors

Internal External(Independent)

6

6Female/Male directors

Male
directors

7

Femaledirectors

5*＊Structure expected to be implemented after shareholders
meeting to be held on May 21, 2019
New candidate for Board of Auditors
Name: Yuko Gomi
Current position: Partner, T. Kunihiro & Co. Attorneys-at-Law
Copyright (c) 2019 Lawson, Inc. All rights reserved.

42

Corporate Slogan: New Lawson Declaration

Slogan logo
Official announcement set
for Tuesday, April 23, 2019
Planned advertising:
15-column newspaper advert,
TV commercials, online/social
media, flyer, stores
Copyright (c) 2019 Lawson, Inc. All rights reserved.

43

“Ho, Ho, Ho” – The Three Surprises

Three Promises
The most
delicious taste

Human
Kindness

Environmental(Machi) friendliness

The Three “Ho” Surprises
Surprise “Ho” discoveries
Be surprised by our string of new brand of sweets, our frozen drinks and parfait, and our wonderful riceballs madewith only the best Japanese rice.
Surprise “Ho” happinessBe surprised at our karaage-kun friend chicken made with 100% Japanese meat, our low carbohydrate, healthybran bread, and our low-salt product ranges.
Surprise “Ho” kindness
Be surprised at our efforts to reduce plastic, reduce food waste, and keep our toilets clean.

Copyright (c) 2019 Lawson, Inc. All rights reserved.

44

Reference Materials

Copyright
Copyright(c)(c)2019
2019Lawson,
Lawson,Inc.
Inc.All
Allrights
rightsreserved.
reserved.

45 45

Earnings Summary: FY2018
Net sales of all stores
Operating profit
Operating profit ratio
Recurring profit
Net profit
EPS (Yen)
Dividend per share (Yen)ROE

FY2017
Actual
2,283.6
65.8
2.9%
65.1
26.8
268.16255
9.7%

Total no. of stores in Japan

13,992(Consolidated ： Billions of yen)

Actual
2,424.5
60.8
2.5%
57.7
25.5
255.71
255
9.3%

FY2018YoY+140.9-5.0-0.4%P-7.4-1.2-12.45±0-0.4%P

v. Plan-25.4+0.7+0.1%P+0.7-2.4-24.12±0-0.8%P

14,659+667-133

Note: Total chain store sales (Net sales of all stores) include sales from the convenience store operation in Japan, international operations and sales from Seijo Ishii (consolidated items only).
Regarding Seijo Ishii, only the store sales of directly operation are included.
Note: The number of stores is the total number of convenience stores in Japan operated by the Lawson Group.
Note: Changes v. plan indicates comparison with the plan announced along with the FY2018 2Q results.

1. Consolidated operating profit : -5.0 billion yen YoY, -0.7 billion yen v. plan
(1) Fell While gross operating revenue increased on higher store numbers, operating profit dropped onincreased SG&A expenses including higher franchisee support costs, investment in next-generation
systems, and costs related to the launching Lawson Bank.
(2) Rose v. plan: While existing store sales fell YoY and the gross profit margin fell short of plan, operating profit
came in above target on cost-cutting efforts.
2. Consolidated net profit : -1.2 billion yen YoY, -2.4 billion yen v. plan
・Reason for falls YoY and v. plan: Higher store-related impairment losses, etc.
Copyright (c) 2019 Lawson, Inc. All rights reserved.

46

Existing Stores (non-consolidated*) *exc. Lawson Store 100
FY2018

Existing-store sales
99.5%
gross profit margin
31.2%(no. of customers -2.3%, spending per customer +1.8%)

102.5%

1.0%
0.5%*ローソンストア100を除く

100.0%

0.0%
-0.5%

97.5%

-1.0%
1H

2H

1H

FY20152H
FY20161H

2H

1H

FY20172H
FY2018Gross profit margin difference (YoY, Right）

Gross profit margin difference, excl. cigarette sales (YoY, Right）

Existing stores gross profit（YoY, Left)

Existing stores sales（YoY, Left）

Note:From
FromFY2018
FY20181H,
1H, Lawson
Lawsonhashaschanged
changedits
itsdisclosure
disclosurefigures
figuresofofthe
theexisting-store
existing-storesales
salestotoexclude
excludethe
theeffecteffectofofthe
theticket
ticketsales
salesincluding
includingconcerts,
concerts,sporting
sportingevents
eventsandandgiftgiftcard
cardsales
salesetc.
etc.
Note:

 Full-year existing-store sales fell short of plan, declining 0.5% YoY. Customer visits declined 2.3% on
severe competition within the industry and sluggish growth in the core CVS business. However, averagecustomer spend rose YoY as efforts to improve evening and nighttime food offerings boosted sales of riceballs, boxed meals, fresh delicatessen items and frozen foods.
 Gross profit margin down 0.1%p YoY to 31.2% on changing product mix makeup as sales of low-margin
cigarette increased.
Copyright (c) 2019 Lawson, Inc. All rights reserved.

47

Store Openings (non-consolidated*) *exc. Lawson Store 100
Net store increase （Left）

Store Closure （Left）

Store opening (Left)（Store numbers）

Daily sales per new store （Right）（Daily new store sales in thousand yen)

1,300

600

1,000

700

1,067

400

400

667

100

400

-200

200

-500
-800

0
FY2015FY2016FY2017FY2018

 Opened 1,067 stores (including 195 Save On and 67 Three F brand changes), 100 below plan on
strict new store opening selection criteria.
 Closed 400 stores as planned, net increase of 667 stores.
 Daily sales per new store dipped slightly YoY to approximately 480,000 yen

Copyright (c) 2019 Lawson, Inc. All rights reserved.

48

Key Components of SG&A Expenses
FY2018FY2017
Act
Act
Change284.7 302.7+18.0(Billions of yen)

Selling, general & administrative expenses

FY2019Forecast
Increase 5-10%

Non-consolidated＜Major Expenses＞
Personnel expenses

44.7

45.9

+1.1

Increase 0-5%

IT-related expenses

7.2

8.7

+1.5 Increase 50-60%

Advertising and promotional expenses

12.5

13.3

+0.8

Increase 5-10%

Sales commission

19.7

22.3

+2.6

Increase 0-5%

Facilities expenses

155.6

166.5

+10.9

Increase 0-5%

Consolidated SG&A expenses

410.1

441.8

+31.6

Increase 5-10%(Hardware leasing, software amortization, maintenance, etc.)

v. PlanYoY

Copyright (c) 2019 Lawson, Inc. All rights reserved.

Consolidated

Consolidated

 In addition to the non-consolidated factors, higher
costs relating to Lawson Bank launch.

Non-consolidated

Non-consolidated

 IT costs: While investment in next-generation systems
increased, we worked hard to reduce investment inexisting IT systems.
 A&P: Up on increased promotion relating tostrengthening of evening/nighttime ranges.
 Sales charges: Increased franchisee disposal loss support

 Down v. plan on lower costs generated by
efficiency gains post new POS cash register
introduction, lower existing IT-related costs, lower
HQ expenses.

 Down v. plan on above-mentioned factors andcost-cutting at subsidiary firms.

49

Earnings of Major Subsidiaries＜Operating Profit of Major Subsidiaries＞

FY2018FY2019YoYchangeForecast

-0.3

-0.0

-0.1

100.0%

8.1

+0.5

8.5

Feb.

100.0%

2.3

+0.4

2.3

United Cinemas Co., Ltd.

Feb.

100.0%

2.6

+0.1

2.7

Chongqing Lawson, Inc.

Dec.

100.0%

-0.2

+0.0

0

Shanghai Hualian Lawson, Inc.

Dec.

100.0%

0.0

+0.5

0.4

(Billions of yen)

FY-endOwnership

ACT

Lawson Store100, Inc.

Feb.

100.0%SEIJO ISHII CO., LTD.

Feb.

Lawson Entertainment, Inc.

Lawson Store 100, Inc.

Reported an operating loss of 300 mil. yen on severe competitive environment.
Existing-store sales down 1.3% YoY. Estimate a small operating loss in FY2019.

SEIJO ISHII CO., LTD.

Existing-store sales up 1.5% YoY on continued strong sales, especiallydelicatessen items made in central kitchens. Expect profit gains in FY2019.

Lawson Entertainment, Inc.

Profit up on more large-scale events and contents. Expect FY2019 profit to holdsteady on the back of higher costs related to securing superior content, systems
investment and other factors.

Shanghai Hualian Lawson, Inc.

Turned a full-year profit in FY2018 on expanding store numbers and rising
trading volumes. Expect further profit gains in FY2019.

Copyright (c) 2019 Lawson, Inc. All rights reserved.

50

Consolidated Capital Expenditure & Cash Flow
● Consolidated Capital Expenditures

FY2017
Actual
55.8
7.4
18.6
5.4

FY2018Actual
42.0
11.4
18.1
7.2

FY2019Forecast
30.0
13.0
12.5
0.0

Subtotal for capital expenditure

87.2

78.9

55.5

Leasing

48.8

59.0

43.0

Depreciation and amortization

58.6

66.8

80.2

FY2017
Actual

FY2018ActualCash flows from operating activities

113.9

128.5

Approx. 125.0

Cash flows from investing activities- 91.2- 81.0Approx. -60.0

22.7

47.5

Approx. 65.0

Cash flows from financing activities- 61.2277.9

Approx. -63.0(Cash dividends paid)- 25.2- 25.5

Approx. -20.0

30.1

354.2

-

（Billions of yen）

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

Free cash flows

Cash and cash equivalents at end of period

FY2019Forecast

The decline in new store investment is compared to 1H of previous year when recorded initial investment
relating brand conversion.
Increase in financial C/F relates primarily to borrowing to replenish ATMs in relation to the launch of Lawson Bank.

Copyright (c) 2019 Lawson, Inc. All rights reserved.

51

FY2019 Company Forecasts (Consolidated)
Net sales of all stores
Operating profit
Operating profit ratio
Recurring profit
Net profit
EPS （Yen ）Dividend per share (Yen)ROE

FY2017
Actual
2,283.6
65.8
2.9%
65.1
26.8
268.16255
9.7%

Total no. of stores in Japan

13,992

14,65999.6%
100.0%
31.3%-0.1%P

99.2% 101.0%
99.5% 100.5%
31.2%
31.4% +0.2%P-0.1%P +0.2%P +0.2%P(Billions of yen)

FY2018FY2019ActualForecast
YoY
2,424.5 2,520.0
+95.5
60.8
60.8
+0
2.5%
2.4% -0.1%P
57.7
54.5
-3.2
25.5
18.0
-7.5
255.71 179.89-75.82
255
150
-105
9.3%
6.5% -2.8%P

14,659±0(Non-consolidated*)*excluding LAWSON STORE100 business

Gross profit at existing stores (YoY)
Net sales at existing stores (YoY)
Gross profit margin ratio
difference excl. cigarette sales (YoY)

Note: Existing-store sales is excluded the effect of the ticket sales including concerts, sporting events and gift card sales etc.
Note: Total chain store sales (Net total of all stores ) include sales from the convenience store operation in Japan, international operations and sales from Seijo Ishii (consolidated items only).
Regarding Seijo Ishii, only the sales of directly operated stores are included.
Note: The number of stores is the total number of convenience stores in Japan operated by the Lawson Group.



Expect FY2019 IT investment to increase but expect operating profit to remain flat on improved daily sales etc.
Meanwhile, expect recurring profit and net profit to fall on reporting of losses relating to the closure of low-profit stores.
Copyright (c) 2019 Lawson, Inc. All rights reserved.

52

FY2019 1H&2H Forecast
FY2019 FCT(Consolidated: Billions of yen)

1H

2H

Full year

Net sales of all stores

1,270.0

1,250.0

2,520.0

Operating profit

33.5

27.3

60.8

Operating profit ratio

2.6%

2.2%

2.4%

Recurring profit

30.5

24.0

54.5

Net profit

15.5

2.5

18.0

Gross profit at existing stores (YoY)

100.8%

101.2%

101.0%Net sales at existing stores (YoY)

100.5%

100.5%

100.5%

Gross profit margin ratio

31.5%

31.3%

31.4%

(Non-consolidated*) *excluding LAWSON STORE100 businessNote: Existing-store sales is excluded the effect of the ticket sales including concerts, sporting events and gift card sales etc.
Note: Total chain store sales (Net total of all stores ) include sales from the convenience store operation in Japan, international operations and sales from Seijo Ishii (consolidated items only).
Regarding Seijo Ishii, only the sales of directly operated stores are included.

Copyright (c) 2019 Lawson, Inc. All rights reserved.

53

Consolidated Balance Sheet at the end of FY2018(Billions of yen)

As of Feb. 28,
2019

Change fromFeb. 28, 2018

As of Feb. 28,
2019

Change fromFeb. 28, 2018

Total current assets

623.9+392.1

Total current liabilities

598.5+219.3(Cash and deposits)

354.2+324.1(Accounts payable-trade)

123.4

+5.2

(Accounts receivable)

120.9

+38.3

(Short-term loans payable)

126.6

+90.2

Total noncurrent assets

718.4

+50.0

(Deposits received)

131.8

+22.1

Property, plant andequipment

382.3

+32.3

Total noncurrent liabilities

461.9+222.3

Intangible assets

106.6

+6.4

(Long-term loans payable)

260.0+204.5

49.7+8.1

Net Assets

281.9

+0.5

Investments and other assets

229.5

+11.2

58.5

-

( Guarantee deposits )

107.0

+6.3

166.1

+0.0

1,342.4+442.2

1,342.4+442.2(Software)

Total Assets(Capital stock)(Retained earnings)

Liabilities and net assets

 Increase in current and fixed liabilities due to increased borrowing to fund ATM installations linked to thelaunch of Lawson Bank. Cash and deposits up on increased borrowing to replenish ATMs.
 Fixed assets up primarily on higher store numbers.
Copyright (c) 2019 Lawson, Inc. All rights reserved.

54

Cautionary Statement
This presentation contains forward-looking statements and forecasts regarding the future plans, strategies and performances of
Lawson and its subsidiaries and affiliates. These statements and forecasts are not historical facts. They are expectations based onassumptions and beliefs derived from information currently available to the Company and are subject to risks and uncertainties
including, but not limited to, economic trends, heightened competition in the domestic convenience store sector, personal
consumption, market demand, the tax system and other legislation. As such, actual results may differ materially from estimates.
Figures in this presentation have been rounded down.
Copyright
Copyright(c)(c)2019
2019Lawson,
Lawson,Inc.
Inc.All
Allrights
rightsreserved.
reserved.

55 55