LAWSON today announced its first-half operating results for the fiscal year ending February 28, 2005. While existing store sales were higher year on year, supported by a favorable consumption environment such as hot weather during the busy summer sales period, our interim results were not entirely satisfactory. That said, the combination of a net increase in stores, strong performances by consolidated subsidiaries and a cost-reduction drive during the interim period lifted both sales and earnings. Click here for more details of our fiscal 2004 first-half operating results.

This year is the last of our three-year Lawson Challenge 2004 business plan. With little time remaining before we draw the curtain on this plan, now is a good time to look back over the past two and half years. I feel, based on the feedback I have received from stores and franchise owners, that we are at last starting to reap the benefits of the structural reforms and other initiatives implemented under the plan. The first steps I took were to raise franchise owner and store awareness of customer satisfaction and increase motivation, resulting in a greater level of trust in Head Office. On top of that, we have raised the skills and improved the mindset of employees. I am convinced that we have laid the foundation for responding to what is likely to be an increasingly intense operating environment. Change can also be seen at Head Office. We have succeeded in opening stores with an emphasis on profitability. And, in product development, we have realigned our manufacturing vendor network to focus on fewer vendors, mega-vendors. These changes have made it possible to develop safe, healthy and tasty products that engender customer trust and are a cut above products to date.

In parallel with these various initiatives at Head Office, each store has continued to concentrate on doing the basics well to meet the expectations of their respective customers. This is a very simple approach, but it will translate into a stronger LAWSON brand. As we focus on realizing our vision of becoming “the ‘hot’ station in the neighborhood,” it is crucial that we place customer satisfaction at the center of everything we do to enhance LAWSON’s brand.

I am also pleased to report that we are beginning the full-scale development of Natural Lawson, a new format that will explore new opportunities and set us apart in the market.

Expect to see us continue working to become “the ‘hot’ station in the neighborhood” and to explore new opportunities.