Total sales increased 0.5% year on year to 116,517 million. Excluding sales of Highway Card toll cards, existing store sales decreased 1.3% (the impact of these cards was 1.3%). Average daily sales per store were 491,000, while the average amount spent per customer was 640, a decrease of 1.3%. The average number of customers per store per day was 773, unchanged from a year earlier. Customer numbers have been recovering since the beginning of the second half of the current fiscal year, which ends on February 29, 2004.

Above-average temperatures across the country in December affected demand for oden (a kind of Japanese hotchpotch or stew) and prepared noodles, which are popular items during the winter months in Japan. Soft drink sales, on the other hand, benefited from the good weather.

In the rice dish category, rice ball sales slipped below the previous year's level and sales of boxed lunches were sluggish in some areas, despite the launch of several new standard products made from quality ingredients, including Wafuorizume Makunouchi (650), Sakeikura Sushi (580) and Niigata Koshihikari Onigiritorimeshi (160).

Sales in the bakery category held steady thanks in part to the popularity of the Totte Oki Sengen series of Lawson original breads and a curry bread developed with a renown curry restaurant Bistro Kirakutei. The third product to be developed in recent times in a tie-up with this partner, this curry bread is priced at 160 and available for only a limited time.

Sales of quality Christmas cakes and year-end gifts from regions throughout Japan renowned for quality produce increased year on year. However, orders for printed New Year's greeting cards fell, due to an increasing tendency for people to create their own cards on personal computers at home.

In last month's report, we referred to the rapid rise in rice prices and the potentially adverse impact on our operating results. This upward trend in prices continued in December. While our strategy to counter these rises has been to strengthen our brands that adhere to high quality and to increase sales of rice dishes, by continuously offering customers safe, healthy and tasty products they can trust. This strategy, however, has not produced short-term results. Declining sales and profit margins for non-food products as well as processed foods are affecting our operating conditions.

Nevertheless, we are addressing these issues by working to drive a recovery in rice dishes with the previously mentioned initiative to strengthen our brands. This will be achieved in part through the planned release in January of additional products in the Niigata Koshihikari series of boxed lunches and rice balls and an accompanying marketing program featuring TV commercials and special prices for LAWSON PASS cardholders.