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Lawson targets U.S. drug stores as it seeks health expertise

By Yuki Yamaguchi
Bloomberg News

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Lawson Inc., the second-biggest convenience store chain in Japan, is looking to buy or invest in drug stores in the U.S. and Europe. The company said it wants to use its expertise to expand its domestic health-care business.

The retailer plans to open one-stop shops catering to an increasing number of health-conscious consumers who eat nutritious food and take supplements and drugs, Chief Executive Officer Takeshi Niinami said.

It hopes investments in foreign drug stores would help it adopt their expertise in its local business, he said.

Lawson, which bought about 5 percent of pharmacy operator Qol Co. last year, is strengthening its health-related business to differentiate itself from competitors.

The chain’s profit has grown 50 percent over the past five years, compared with 5.7 percent for larger rival Seven & I Holdings Co., owner of the 7- Eleven brand, according to data compiled by Bloomberg News.

“We see more business opportunity if we can absorb the know-how of U.S. or European drug stores and put it into practice in Japan and China,” which face increasingly aging populations, Niinami said.

Tokyo-based Lawson plans to expand sales of drugs and its offerings of low-carbohydrate, low-calorie food for health-conscious customers such as diabetics among other healthy options, Niinami said.

The company hasn’t started talks with any acquisition targets and hasn’t decided how much to spend, Niinami said.

The Lawson’s brand has its roots in the Akron area. The Lawson’s Milk Co. was started in Cuyahoga Falls in 1939, by James “J.J.” Lawson. In 1958, Lawson sold his stores — more than 190 locations — to Consolidated Foods.

Under Consolidated’s ownership, the brand grew to more than 700 stores in several states. In 1975, Consolidated struck an agreement with Daiei Inc., one of Japan’s largest grocery chains, to operate Lawson’s stores there.

In 1984, when Consolidated sold its Lawson’s stores to Dairy Mart, the American stores became Dairy Marts, while the Japanese stores continued to go by the Lawson’s name. When Dairy Market filed for bankruptcy in 2002, Canadian company Alimentation Couche-Tard, acquired the stores and renamed them Circle K.

Since 1984, the only stores operating under the Lawson name have been in Japan, until last year, when Lawson Inc. opened a store in Honolulu, the company’s first reappearance on American soil in 28 years.

Lawson’s shares have gained 37 percent this year, lagging behind the 39 percent climb of the broader Topix index and the 61 percent surge of Seven & I.

Lawson operated 11,249 outlets in Japan and 461 stores overseas as of May. More than 100 were Natural Lawson stores selling health-oriented food such as bento boxes with brown rice and tofu tortillas. About 80 locations also sell drugs.

Seven & I, the world’s largest convenience-store operator, had more than 50,000 outlets worldwide in March, according to its website.

Beacon Journal food writer Lisa Abraham contributed to this report.

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