Flash Report on the Consolidated Result
for the 3rd Quarter Ended February 28, 2013
January 9, 2013
Listed Company Name: Lawson, Inc.
Code No.: 2651
(URL http://www.lawson.co.jp/company/ir/index.html)
Company Representative: Takeshi Niinami, Representative Director, President & CEO
Contact:Tomoki Takanishi , Financial & Accounting Office General Manager
Tel.: (03) 5435-2773
Scheduled date for submission of quarterly earnings report: January 15, 2013
Scheduled date for payment of dividend: Supplementary Documents quarterly results: Yes
Presentation of quarterly results: No
1. Consolidated Performance for the current 3rd quarter of the current period (from March 1, 2012, to November 30,
2012)(1) Consolidated operating results
Note: Amounts below one million yen are truncated.
Total operating revenues¥ Million%
Current 3rd Quarter
372,266
3.2
Previous 3rd Quarter
360,865
9.0
Net profit¥ Million
28,546
20,614Current 3rd Quarter
Previous 3rd Quarter

%
38.5
(0.8)

Operating profit¥ Million%
53,495
7.5
49,772
8.4

Recurring profit¥ Million%
53,163
6.8
49,7639.9

Net income per share¥
285.79206.41

Fully diluted income per share¥
285.35206.16

Notes: Comprehensive income November, 2012 28,123 million(34.3%)

November, 2011 20,942 million( - %)(2) Consolidated financial position
Total assets¥ Million
At November 30,2012
552,103
Last fiscal year
531,453
Notes: Capital adequacy November, 2012 219,771 million

Net assets
Capital adequacy ratio¥ Million%
223,41239.8
214,662
39.7
February, 2012 211,154 million

2. Dividends status
Annual dividends per share2011 fiscal year

1Q

2Q

3Q

¥
―

¥
87.00

¥
―

2012 fiscal year―
100.002012 fiscal year
(Forecast)
Notes: Revision of forecast for dividends in the first half: No

1

Year-end
dividend¥
93.00¥
180.00100.00200.00Total―

3. Forecast Consolidated Performance for 2012 fiscal year （from March 1, 2012, to February 28, 2013）
Operating profit
Recurring profit
Net profit
Total operating revenues¥ Million%¥ Million%¥ Million%¥ Million%
2012 fiscal year
501,000
4.6
66,0006.8
65,1005.5
33,40034.2
Reference: Forecast net profit per share for the 2012 fiscal year: 334.37yen
Note: Revision of forecasts for consolidated performance during the first half: No
4. Other(1) Change in important subsidiaries during the period (Changes in certain specified subsidiaries resulting in revised
scope of consolidation): Yes
Lawson (China) Holdings, Inc.

(2) Adoptions of special accounting methods in presentation of quarterly financial statements: No(3) Changes in accounting policies, changes in accounting estimation, retrospective restatement
1. Changes of accounting policies associated with revision in accounting standards: None
2. Other changes: None
3. Changes in accounting estimation: None
4. Retrospective restatement: None
(4) Number of issued shares:i) The number of the stocks issued in the end of term
November, 2012: 100,300,000
February, 2012:
100,300,000ii) The number of treasury shares in the end of term
November, 2012: 410,959
February, 2012: 416,166
iii) Average number of shares during the term
November, 2012: 99,886,354 November, 2011: 99,868,413
Note: Disclosure of progress of quarterly review procedures
At the time of disclosure of this quarterly flash report, review procedures for quarterly earnings reports based on the
Financial Instruments and Exchange Act had not been completed.
Note: The above-mentioned forecast is based on the information, which is able to get hand at present, and including a
potential risk and uncertainty. Therefore, actual achievements may differ from these forecasts due to many factors.

2

1．
．Review of Operations(1) Review of Operating Results
During the first nine months of fiscal 2012, the period from March 1 to November 30, 2012, the Lawson
Group (hereinafter, the “Group”) implemented measures to reinforce its social infrastructure function thatprovides essential items at the local level with the aim of realizing the Group’s corporate philosophy of“Creating Happiness and Harmony in our Communities.” By promoting operational reform, PRiSM, thatis based on analysis of card data from the multi-partner loyalty program, Ponta, the Group focused on
customer relationship management (CRM)*1 and supply chain management (SCM)*2 in order to offer amerchandise assortment that meets the specific needs of customers in each neighborhood.
*1

Customer relationship management (CRM)

A marketing management method for providing merchandise and services that meet the specific needs of customers*2

Supply chain management (SCM)

A business administration method for comprehensively managing all stages of business, from procurement to sales, tostreamline and optimize the entire business process.

As a result, for the first nine months of fiscal 2012 on a consolidated basis, total operating revenues
increased by 3.2% from the corresponding period of the previous fiscal year to ¥372,266 million.
Consequently, operating profit increased by 7.5% year on year, to ¥53,495 million, and recurring profit ingrew by 6.8% year on year, to ¥53,163 million. Net profit rose ¥7,932 million, up 38.5% year on year, to¥28,546 million owing in part to extraordinary loss, which decreased ¥12,247 million, due to asset
retirement obligations and losses stemming from the Great East Japan Earthquake disaster recognized in
the previous fiscal year.

Operating results by business segment are as follows.

(Convenience Store Operations)
The status of merchandising strategy and services, store operations, store development and other aspectsof Convenience Store Operations and Overseas Businesses for the first nine months of fiscal 2012 isoutlined as follows.

[Merchandising and Service Strategies]
On the merchandising front, the Group developed original products that cater to customer needs such as
ready-made meals (ex. lunch boxes, over-the-counter fast foods, and others) and items from our private
brand, “Lawson select,” which is mainly comprised of prepared food and delicatessen items, processed
foods, daily necessities, and beverages, by leveraging customer purchase data acquired through the Ponta
program that the Group joined in March 2010. We also managed to provide appealing products that offer
value for money as a result of the enhancement of added-value in the ingredients procurement process,3

including bulk procurement of high-quality food materials, which resulted in an improvement of grossprofit margin ratio.
In an effort to expand our customer base, we strengthened our lineup of pre-cut vegetables and other fresh
food items under our Fresh Foods Convenience Store Declaration launched on October 30, 2012, while
also striving to encourage multi-item purchasing by expanding our lineup of processed foods such as
seasoned cooking mixes.
In addition, we continued to fortify our fast food category to improve store profitability. Specifically, we
promoted sales of prepared fast foods such as fried chicken, and increased the number of stores equippedwith MACHI café, which totaled 2,253 stores as of November 30, 2012. MACHI café, which offers
freshly ground drip coffee, is well-received by our customers and we intend to continue introducing thecafé to more stores.
In the noodles category, the Grilled Lasagna Bolognese made with authentic wide raw pasta was launchedunder our original brand Pasta-ya, and was a great hit, with sales volume exceeding 1 million units in
October 2012.
In the dessert category, we renewed the packages of our original dessert brand, the Uchi Café SWEETS
line, and launched from this line an autumn series of limited-time authentic Japanese desserts comprisingseasonal delicacies—sweet potatoes, chestnuts, and pumpkin—in an effort to expand our customer baseby attracting female and elderly customers.

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

Previous 3rd Quarter

Current 3rd Quarter

March 1, 2011 to November 30, March 1, 2012 to November 30,
2011

Product group

2012

Sales

Percentage of

Sales

Percentage of(Millions of

Total (%)

(Millions of

Total (%)

yen)

yen)

Processed foods

775,300

56.2

812,201

56.0

Fast foods

261,19818.8

283,696

19.6

Daily delivered foods

200,65914.6

207,982

14.3

Nonfood products

143,291

10.4

146,69910.1

1,380,450

100.0

1,450,579

100.0

Total

In sales promotions, the Group implemented programs centered on tie-ups with popular characters such as
the Autumn Rilakkuma Fair with the aim of achieving a high return on investment (ROI). In addition, we
analyzed card data from Ponta members and used the information to encourage customers to visit ourstores in the evening and night time. Furthermore, we proactively implemented promotional campaigns
based on social networking services (SNS). Total Ponta members reached 46.19 million as of November
430, 2012(on the basis of the number of registered members only), including members that joined throughother participating companies. In addition to expanding its Ponta membership base, the Group provided
loyalty points exclusively to Ponta members, which resulted in an increase in the sales ratio of Ponta
members to approximately 45%.

[Store Operations]
In store operations, we leveraged PRiSM, which was introduced with the aim of achieving operational
reform, to reduce sales opportunity loss. In addition, we strived to enhance our efficiency and productivity
in consulting services to franchise stores by proactively using tablet devices.

[Store Development and Store Format Strategy]
In opening new stores, the Group has focused on maximizing return on investment (ROI) and has strictly
adhered to its proprietary standards for opening stores, in addition to prioritizing profitability.
Regarding the format strategy, we promoted store openings and refurbishment to meet the needs ofcustomers specific to each neighborhood through LAWSON, NATURAL LAWSON and LAWSONSTORE100.
[Change in the Total Number of Stores] (March 1, 2012 – November 30, 2012)
LAWSON
Total stores as ofMarch 1, 2012
Change during fiscal
year
Total stores as ofNovember 30, 2012

NATURALLAWSONLAWSONSTORE100

Total

9,038

100

1,172

10,310

560

11

33

604

9,598

111

1,205

10,914[Distribution of Stores in Japan by Region (As of November 30, 2012)]
NumberPrefecture

NumberPrefectureof stores

NumberPrefectureof stores

NumberPrefectureof stores

NumberPrefectureof storesof stores

Hokkaido

577

Saitama

458

Mie

101

Okayama

131

Saga

64

Aomori

182

Chiba

438

Ishikawa

95

Hiroshima

154

Nagasaki

92

Akita

167

Ibaraki126

Toyama192

Yamaguchi

116

Oita

147

Iwate

160

Tokyo

1,545

Fukui

101

Tottori

96

Kumamoto

102

Miyagi

197

Kanagawa

791

Kyoto

267

Shimane99

Miyazaki89

Yamagata

66

Shizuoka

201

Shiga

133

Kagawa103

Kagoshima

115

Fukushima

90

Yamanashi

87

Nara

100

Ehime

167

Total

Niigata114

Nagano142

Wakayama

117

Tokushima108

Tochigi

123

Aichi

513

Osaka

999

Kochi

64

Gunma

80

Gifu

130

Hyogo

587

Fukuoka

388

5

10,914

The number of LAWSON STORE100 fresh foods convenience stores, operated by the Group’s
consolidated subsidiary Ninety-nine Plus Inc., reached 1,205 as of November 30, 2012. We have been
converting company-operated stores into franchised stores to promote our franchise-based store
management, which is one of the Group’s strengths. In addition, at our fresh food-type LAWSON stores,
which are enhanced conventional LAWSON stores with a stronger assortment of perishable foods anddaily delivered foods, we promoted a strategy to expand our customer base by attracting elderly
customers and housewives. As of November 30, 2012, the number of these fresh food-type LAWSON
stores totaled 5,027. With the aim of steadily supplying high-quality products, we are operating sevenLawson Farms in Japan, which are partially funded by the Group, and are selling fresh vegetables
produced at these farms primarily at fresh food-type convenience stores.
The number of LAWSON chain stores operated by Lawson Toyama, Inc. (hereinafter, “Lawson Toyama”),
a consolidated subsidiary of Lawson, Inc. (hereinafter, “the Company”), reached 73 as of November 30,
2012. Lawson Toyama was merged into the Company on December 1, 2012.
The number of LAWSON chain stores operated by the Company’s equity-method affiliate, Lawson
Okinawa, Inc. through a business alliance agreement with SAN-A CO., LTD. totaled 153 as of November
30, 2012.
On August 29, 2012, the Company acquired five percent of the total number of shares issued by Qol Co.,
Ltd., with which the Company concluded a business alliance contract in 2008. The capital alliance aims tofurther strengthen the business alliance between the two companies and accelerate development of theirbusiness operations. The number of Pharmacy LAWSON (pharmaceutical convenience stores) operated
by Qol totaled 20 as of November 30, 2012.

[Overseas Operations]Regarding our business in the People’s Republic of China (hereinafter, “China”), the Company
established Lawson (China) Holdings, Inc. (hereinafter, “Lawson China”) in Shanghai, China in May
2012, as a holding company (investment company) that controls business investment, license
management, and administrative management functions within China. The Company’s subsidiaries inShanghai, Chongqing and Dalian will be controlled by Lawson China in the future. The number of
LAWSON stores operated by Shanghai Hualian Lawson, Inc., the Company’s consolidated subsidiary,
totaled 312 as of November 30, 2012. The Company’s consolidated subsidiary, Chongqing Lawson, Inc.,
was operating 54 LAWSON stores as of November 30, 2012 while Dalian Lawson, Inc., anotherconsolidated subsidiary, was operating eight LAWSON stores as of November 30, 2012.
Outside of China, within the Republic of Indonesia, PT MIDI UTAMA INDONESIA Tbk (hereinafter,“MIDI”), in which the Company’s consolidated subsidiary Lawson Asia Pacific Holdings Pte. Ltd. has a
30% equity stake, operates 561 stores in its own store format and 85 LAWSON stores in Jakarta and its
outskirts as well as in Bali Island as of November 30, 2012.
The Company’s non-consolidated subsidiary, Lawson USA Hawaii, Inc., in Honolulu, Hawaii was6operating two LAWSON stores as of November 30, 2012.

(Other Businesses)
In addition to convenience store operations, the Group is involved in the entertainment/e-commercebusiness, and other businesses.
We continued to leverage our alliance with Yahoo JAPAN Corporation (hereinafter, “Yahoo Japan”) andexpanded e-commerce business with a primary focus on the Group’s online shopping mall, Loppi.
In addition, on December 4, 2012, we announced that a new business will be launched in January 2013 by
Smart Kitchen, Inc., a joint venture established with Yahoo JAPAN Corporation. By leveraging theknow-how and infrastructure of Yahoo JAPAN Corporation and the Group, Smart Kitchen, Inc. will offer
an online delivery service dubbed Smart Kitchen, distributing food and daily necessities to customers
across Japan. The new service is scheduled to start in mid-January 2013, expanding the number of items
available by March 2013 to 23,000, one of the largest merchandise assortments to be offered in the homedelivery industry.
The Company’s consolidated subsidiary Lawson HMV Entertainment, Inc., which is engaged inentertainment/e-commerce-related business, posted an increase in operating profit due to strong sales oftickets for large-scale shows and performances. Revenues from the Group’s ticket issuing services forfiscal 2012 are expected to exceed ¥100 billion.
Lawson ATM Networks, Inc., a consolidated subsidiary operating a financial services-related business,posted a rise in operating profit as a result of an increase in the number of ATMs installed nationwide in
LAWSON stores, along with an increase in the number of transactions. As of November 30, 2012, thenumber of ATMs installed nationwide totaled 9,611.
(2) Qualitative Information Regarding Changes in Consolidated Financial Indicators
Financial Position at the 3rd Quarter end Total Assets, Total Liabilities and Net Assets at 3rd Quarter End“Assets”
At November 30, 2012, total assets stood at ¥552,103 million, an increase of ¥20,650 million fromFebruary 29, 2012. This mainly reflected a ¥16,845 million increase in property and store equipment.
“Liabilities”.
Total liabilities increased ¥11,900, million from February 29, 2012 to ¥328,691 million at November 30,
2012. This mainly reflected a ¥8,805 million increase in accounts payable-trade.
“Net assets”
Net assets stood at ¥223,412 million, an increase of ¥8,750 million from February 29, 2012. This mainly
due to the payment of ¥19,278 million in dividends although quarterly net profit of ¥28,546 million.

7

2．
．Other(1) Change in important subsidiaries during the period (Changes in certain specified subsidiaries resulting
in revised scope of consolidation): Yes
Lawson (China) Holdings, Inc.
(2) Adoptions of accounting methods particular to presentation of quarterly financial statements: None
(3) Changes in accounting policies, changes in accounting estimation, retrospective restatement: None8

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

As of November 30, 2012 and February 29, 2012
February 29, 2012

November 30, 2012

Cash and bank deposits

79,074

62,104

Accounts receivable—due from franchised stores

19,521

27,869Merchandise inventories

8,075

9,422

Accounts receivable—other

32,64546,655

Deferred tax assets

4,800

3,055

Other

16,19013,043

Allowance for doubtful accounts

(149)

(214)

160,157

161,937

219,536

238,133

Accumulated depreciation(112,475)(121,709)

Buildings and structures-net

107,061

116,423

Vehicles, tools, furniture and fixtures

63,563

66,799

Accumulated depreciation(49,549)(51,985)

Vehicles, tools, furniture and fixtures-net

14,013

14,81372,53887,135

Accumulated depreciation(18,400)(27,096)

Lease assets-net

54,13760,039

Other

8,622

9,403

Subtotal

183,835

200,680

Software27,551

24,452

Goodwill

10,871

10,096

Other

553

492

Subtotal

38,97735,041Long-term loans receivable

32,13834,203

Lease deposits

83,66585,677

Deferred tax assets

16,87016,732Claims provable in bankruptcy, claims provable

15,136605

Other

16,523

18,463

Allowance for doubtful accounts(15,851)(1,239)Subtotal

148,483

154,443

Total

371,295

390,166

Total assets

531,453

552,103

Current assets:

Total
Fixed assets:
Property and store equipment
Buildings and structures

Lease assets

Intangible fixed assets;

Investments and Other;in rehabilitation and other9

（Millions of yen）
February 29, 2012

November 30, 2012

Accounts payable —trade88,262

97,067

Accounts payable— due to franchised stores

1,390

1,086

Lease obligations

11,223

13,558

Income taxes payable

15,305

7,864

Deposits received

75,00469,956

Accrued employees’ bonuses

3,204

1,293

701

312

22,88633,090217,978

224,229

Lease obligations

37,902

42,183

Allowance for employees’ retirement benefits

8,745

9,688

308

314

Deposits received from franchisees and lessees

35,73534,998Asset retirement obligations

15,161

16,461

960

814

Total

98,812

104,462

Total Liabilities

316,791

328,691

Common stock

58,50658,506

Capital surplus

47,70747,709Retained earnings

107,249

116,517

Treasury stock(1,627)(1,608)211,835

221,125

Net unrealized loss on available-for-sale securities

(11)

(64)

Land revaluation difference

(567)

(567)

Foreign currency translation adjustments

(101)

(722)

Total accumulated other comprehensive income(680)(1,354)

Stock acquisition rights

442

429

Minority interests

3,064

3,211

Total net assets

214,662

223,412

Total Liabilities and net assets

531,453

552,103

Current liabilities:

Provision for use of points granted
Other
Total
Long-term Liabilities;

Allowance for retirement benefits to executive officers and corporate auditors

Other

Shareholders’ equity;

Total Shareholders’ equity
Accumulated other comprehensive income;10(2) Consolidated Statements of Income (Unaudited)
For the 3rd Quarter of the fiscal year (From March 1, 2011 to November 30, 2011) (From March 1, 2012 to November 30, 2012)（Millions of yen）
November 30, 2011

November 30, 2012

Total operating revenues

360,865

372,266

Net sales

156,929

149,103

117,822112,067

39,10637,035

Franchise commission from franchised stores

163,755

175,951

Other

40,18047,211

Operating revenues

203,936

223,162

Operating gross profit

243,043

260,198

193,270

206,70249,77253,495

1,618

1,453

Interest received

494

553

Equity in earnings of affiliates

155

298

Other

968

601

1,628

1,785

Interest expense

829

914

Other

798

870

49,76353,163

2,042

324

-

145

Gain on step acquisitions

1,570

-

Gain on negative goodwill

273

153

Other

198

25

16,107

3,859

Loss on retirement of non-current assets

1,531

890

Impairment loss

2,716

2,744

Loss on disaster

3,421

-

Loss on adjustment for changes of accounting standard

8,292

-

145

225

Income before income taxes and minority interests(35,699)

49,628

Income taxes;

14,452

20,836

Income taxes - current

17,144

18,916

Deferred income taxes(2,692)

1,919

Income before minority interests

21,246

28,792

Minority interests in net income

632

245

20,61428,546

Cost of goods sold
Gross Profit

Selling, general and administrative expenses
Operating profit
Non – operating income and expenses;
Non – operating income;Non – operating expenses;

Recurring profit
Extraordinary income and losses;
Extraordinary income;Gain on sales of investment securities

Extraordinary losses;

for asset retirement obligations
Other

Net profit

11

Consolidated Statements of Comprehensive Income (Unaudited)
For the 3rd Quarter of the fiscal year (From March 1, 2011 to November 30, 2011) (From March 1, 2012 to November 30, 2012)（Millions of yen）
November 30, 2011
Net income before minority interests

November 30, 2012

21,246

28,792

Unrealized loss on available-for-sale securities

(34)

(52)

Land revaluation difference

67-

Foreign currency translation adjustment

(315)

(66)

Share of other comprehensive income of associates

(21)

(550)

Total other comprehensive income

(304)

(669)

Comprehensive income

20,942

28,123

Owners of the parent

20,31027,872

Minority interests

632

250

Other comprehensive income

Comprehensive income attributable to12(3) Notes to Going Concern
Not Applicable.

(4) Notes to Significant Changes in Shareholders’ Equity
Not Applicable.

13