SENSHUKAI CO.,LTD.

(Tokyo Stock Exchange, First Section: 8165)

Second Quarter of Fiscal 2015
Earnings Presentation
July 30, 2015

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Contents

1.

Consolidated Results of Operations for 2Q Fiscal 20152.

Overview by Segment

3.

2Q Fiscal 2015 Results Relative to Initial Plan

4.

Consolidated Earnings Outlook for Fiscal 2015

5.

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2

1. Consolidated Results of Operationsfor 2Q Fiscal 2015

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2Q Fiscal 2015 Consolidated Statement of Income (YoY Comparison)(Millions of yen)

2Q 2014

2Q 2015% to netsales% to netsales

YoY change
Difference

Changein % to net
sales-5,887-7.9%

Net sales

74,048

Cost of sales

39,08252.8%

36,451

53.5%-2,631

0.7%

Gross profit

34,96647.2%

31,71046.5%-3,256-0.7%

SG&A expenses

33,13244.7%

32,864

48.2%

-268

3.5%

Operating income

1,833

2.5%

-1,154-1.7%-2,987-4.2%

Ordinary income

1,946

2.6%

-1,063-1.6%-3,009

-4.2%

914

1.2%

-1,219-1.8%-2,133-3.0%

Net income

68,161

Net sales decreased due to the prolonged drop in sales in the mail-order business after the April 2014
consumption tax hike, a revision in marketing measures (shift from coupon distribution to point offer
structure), and a review of the price range (reduction of low-price products)
Operating income decreased because of an increase in the cost of sales ratio due to the higher costof merchandise as the yen weakened, growth in the percentage of sales from discounted
merchandise and an increase in clearance sales
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2Q Fiscal 2015 Consolidated Balance Sheet (Compared with End-Fiscal 2014)(Millions of yen)Dec. 31, 2014

Jun. 30, 2015

Difference• Current assets

53,55458,273

4,718

 Cash and deposits:• Non-current assets

47,23149,782

2,551

 Property, plant and equipment: Investments and other assets:+¥1.6bn+¥0.9bn

Total assets

100,785

108,055

7,269• Current liabilities

33,47030,449-3,021

 Income taxes payable:-¥0.7bn• Non-current liabilities

14,15318,0273,874

 Long-term loans payable:+¥4.3bn

Total liabilities

47,624

48,477853

 Capital stock: Capital surplus:
 Retained earnings:
 Treasury shares:+¥1.9bn+¥2.8bn-¥1.6bn-¥2.7bn

Remarks

Assets+¥11.6bn

 Notes and accounts receivable-trade: -¥2.4bn

Liabilities

Net assets• Shareholders’ equity

55,707

61,576

5,868• Accumulated othercomprehensive income-2,546-2,033

513

-

35

35

53,16059,577

6,416

100,785

108,055

7,269• Minority interests
Total net assets
Total liabilities and net assets

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2Q Fiscal 2015 Consolidated Statement of Cash Flows (YoY Comparison)(Millions of yen)

2Q 2014
Net cash provided by(used in) operating
activities

3,514

2Q 2015

3,141

Difference-373

2Q 2015 highlights
 Decrease in other current assets:+¥2.4bn Decrease in inventories:+¥1.7bn Decrease in other current liabilities:-¥2.3bn Purchase of property, plant and equipment: -¥1.9bn

Net cash provided by(used in) investing
activities-1,290-3,653-2,363

Net cash provided by(used in) financing
activities

2,122

10,844

8,722

Cash and cash
equivalents at end of
period11,11818,3097,190

 Payments into time deposits:-¥1.0bn Purchase of shares of subsidiaries:-¥0.6bn Proceeds from long-term loans payable:+¥5.6bn Proceeds from issuance of common shares: +¥3.8bn

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 Proceeds from disposal of treasury shares: +¥3.6bn
 Repayments of long-term loans payable:-¥1.3bn6

Consolidated Sales by Business Segment (YoY Comparison)(Millions of yen)
2Q 2014
14年第2Q

2Q 2015
15年第2Q-10.6%
66,04259,033

13.5%
5,890

6,685

10.8%
1,875

2,078
239

Mail-order
通販business

Bridalbusiness
ブライダル

Corporates
法人business

364

Othersその他* “Others” represents services business primarily offering insurance and credit card services, and childcare business
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Consolidated Operating Income by Business Segment (YoY Comparison)(Millions of yen)
2Q 2014
14年第2Q
1,464

2Q 2015
15年第2Q

5.1%-48.2%
178

173

188

89
16

-4

-1,434Mail-order
通販business

Bridalbusiness
ブライダル

法人businessCorporates

Othersその他* “Others” represents services business primarily offering insurance and credit card services, and childcare business
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2. Overview by Segment

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Overview of the Mail-order Business (YoY Comparison)

2Q 2014

2Q 2015

Difference

Net sales(Millions of yen)

66,04259,033-7,009Operating income(Millions of yen)

1,464

-1,434-2,898Semi-annual number of active
customers (10,000 members)

275.9

258.4

-17.5

Semi-annual number of new
members (10,000 members)

44.0

40.2

-3.8

Average sales per order (Yen)

10,726

10,325-401

Semi-annual order frequency per
customer (Times)

2.12

2.08

-0.04

Catalog circulation(10,000 volume)

3,531

3,778

247

Major factors

 Revision in marketingmeasures andcancellation of TV
commercials

 Review of the price range
resulted in a decrease in
the number of purchases

 Increase in the numberof new medium* All figures other than net sales and operating income are non-consolidated data for the mail-order business(excluding the Hanpukai business)
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Mail-order Business – First Half Monthly Sales (YoY Comparison)
Mail-order Business –Monthly Sales

January to June: 89.4%
100.6%

YoY
100%

99.0%
86.1%

92.1%

91.4%

71.3%
Drop in sales following
the consumption tax hike

1月
Jan.

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2月
Feb.

3月
Mar.

4月
Apr.

5月
May

6月
Jun.
11

Mail-order Business –Sales by Product Category (YoY Comparison)(Millions of yen)
2Q 2014
14年第2Q-9.8%

2Q 2015
15年第2Q

28,61525,816-13.3%
17,17814,894-12.8%
7,379-11.6%
9,267

6,434

8,188

-0.6%
2,594 2,578

Apparel
衣料品

Fashion
服飾雑貨
accessories

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Interior
インテリア
goods

Household
生活雑貨
goods

Foods
食品

11.5%
1,006 1,122
Othersその他
12Mail-order Business –Differences in Cost-of-sales Ratio and SG&A Expenses(YoY Comparison)
Cost-of-sales Ratio

SG&A Expenses

1.0%(Millions of yen)

-944

53.1%

54.1%

29,66928,725

2Q 2014
14年第2Q

2Q 2015
15年第2Q

2Q
2014
14年第2Q

2Q 2015
15年第2Q

Growth in the percentage of sales from discounted
merchandise
The cost-of-sales ratio increased due to the weaker yen(For merchandise purchased from trading companies
and manufacturers and direct purchases)
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Distribution costs:
Packing expenses decreased due to lower sales
SG&A expenses:
Number of pages of catalogs decreasedPrinting and production costs for catalogs were cut

13Internet-related Indicators
Internet Sales(Millions of yen)

Ratio of Internet-based Orders(including mobile sales)

2.8%
74.1%

76.9%

2Q 2014
14年第2Q

2Q 2015
15年第2Q

Sales via catalog: Customer reads a catalog then purchases byInternet, entering catalog number

Internet-only sales: Customer makes purchase through theInternet by putting products into online shopping cart

43,066
7,430

43,865
5,971

39,9004,306

Amount and Share of Smartphone Sales
Net sales（Millions of yen)

35,63637,894

13,158

2Q 2014
14年第2Q

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15,34635,594
Share of sales

2Q 2013
13年第2Q

2,188

2Q 2015
15年第2Q

8.5%

30.0%

38.5%

2Q 2014

2Q 2015

14

Overview of the Bridal Business (YoY Comparison)

Net sales(Millions of yen)
• New facilities

2Q 2014

2Q 2015

Difference

5,890

6,685

795

-

929

929

• Existing facilities

5,890

5,756

-134

Operating income(Millions of yen)

173

89

-84

18

21

3

1,518

1,722

204

379

377

-2

(including PLANETWORK facilities)

Guesthouses
Weddings (Couples)
Average sales per wedding(10,000 yen)

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Major factors

 Opening of new facility in
Niigata, and two
PLANETWORK facilities

 Opening of new facility in
Niigata, and two
PLANETWORK facilities

 Sales per wedding are
low at PLANETWORK’s
restaurant wedding

15

Overview of the Corporates Business (YoY Comparison)(Millions of yen)

2Q 2014

2Q 2015

Difference

1,875

2,078

202

1,324

1,434

110

 Increase in contracting
sales of existing clients• Sampling

430

505

75

 Increase in the numberof new clients• Novelties

85

115

30

 Increase in the numberof new clients• Others

34

22

-12

178

188

10

Net sales• Contracting services

Operating income

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Major factors

16

3. 2Q Fiscal 2015 Results Relative toInitial Plan

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Consolidated Results Compared to Initial Plan for 2Q Fiscal 2015
(Millions of yen)

2Q 2015(Initial plan)

2Q 2015(Results)% to net
sales

Relative to initial plan

% to net
sales

Difference

Changein % to net
sales-5,839-7.9%Net sales

74,000

Cost of sales

39,18553.0%

36,45153.5%-2,7340.5%

Gross profit

34,81447.0%

31,71046.5%-3,104-0.5%

SG&A expenses

33,76445.6%

32,864

48.2%

-900

2.6%

Operating income

1,050

1.4%

-1,154-1.7%-2,204-3.1%

Ordinary income

1,250

1.7%

-1,063-1.6%-2,313

-3.3%

700

0.9%

-1,219-1.8%-1,919-2.7%

Net income
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68,16118

Consolidated Sales by Business Segment (Compared with Initial Plan)(Millions of yen)
15年第2Q当初
2Q 2015

15年第2Q実績
2Q 2015
results

initial plan

-10.1%
65,68959,033

13.1%
5,909

6,685

3.0%
2,018

2,078
384

通販 business
Mail-order

ブライダル
Bridalbusiness

法人
Corporates
business364

その他
Others* “Others” represents services business primarily offering insurance and credit card services, and childcare business
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Consolidated Operating Income by Business Segment(Compared with Initial Plan)(Millions of yen)
2Q 2015
15年第2Q実績

2Q 2015
15年第2Q当初

results

initial plan

5.6%

904
178

188

89
-9

-23

-4

-1,434
通販 business
Mail-order

ブライダル
Bridalbusiness

法人businessCorporates

その他
Others* “Others” represents services business primarily offering insurance and credit card services, and childcare business
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4. Consolidated Earnings Outlook for
Fiscal 2015

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Fiscal 2015 Consolidated Earnings Outlook (YoY Comparison)(Millions of yen)2014 (Results)

2015 (Forecasts)% to netsales% to netsales

YoY change
Difference

Change in %to net sales

Net sales

142,526

Cost of sales

75,03852.6%

72,50953.5%-2,5290.9%

Gross profit

67,48847.4%

62,99046.5%-4,498-0.9%

SG&A expenses

64,39945.2%

66,390

49.0%

1,991

3.8%

Operating income

3,088

2.2%

-3,400-2.5%-6,488-4.7%

Ordinary income

3,549

2.5%

-3,150-2.3%-6,699-4.8%

Net income

1,798

1.3%

-4,400-3.2%-6,198-4.5%

Net sales:

135,500-7,026-4.9%

Forecast a prolonged drop in sales in the mail-order business after the April 2014 consumption
tax hike
Aiming for a recovery in sales through conducting more marketing measures in the second half

Operating income: Forecast lower operating income due to increases in the cost of sales ratio and SG&A expenses(sales promotion expenses and expenses at Minokamo Distribution Center)
Net income:

Forecast lower net income as a recoverability of deferred tax assets is uncertain

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Fiscal 2015 Consolidated Sales Outlook by Business Segment(YoY Comparison)(Millions of yen)
14年実績
2014
results

-8.7%

15年予想
2015
forecasts

125,296

114,457

25.4%
15,991
12,750

5.6%
3,944

4,164
534

Mail-order
通販business

Bridalbusiness
ブライダル

Corporates
法人business

888

Othersその他* “Others” represents services business primarily offering insurance and credit card services, and childcare business
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Fiscal 2015 Consolidated Operating Income Outlook
by Business Segment (YoY Comparison)(Millions of yen)
14年実績
2014
results

15年予想
2015
forecasts

18.7%
1,921
834

990

3.0%
304

313

26

130

-4,841
Mail-order
通販 business

Bridalbusiness
ブライダル

Corporates
法人 business

Othersその他* “Others” represents services business primarily offering insurance and credit card services, and childcare business
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5. Others

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Topics

Alliance with JFR and Alliance Activities
Senshukai and J.FRONT RETAILING Co., Ltd. (JFR) signed a capital and business alliance agreement on April
17. The two companies then established a Business Alliance Promotion Committee to determine specificactivities for capturing synergies.
As a step that can be implemented quickly, the committee is focusing on the mutual use of brands andmerchandise with the goal of increasing sales and improving profitability.
There will be a clearance sale as a limited-time trial in order to attract more customers to stores and websites.
In addition, the merchandise of both companies will be sold during the summer vacation period at Daimaru
and Matsuzakaya department stores and Senshukai’s mail-order sales channels. These measures will be used
to make consumers more aware of the two companies’ brands and monitor the responses of customers inorder to establish a foundation for full-scale joint sales activities.
From a longer-term perspective, alliance activities may also include the joint development of private brands
and the outsourcing to Senshukai of operations for the JFR Group’s virtual store business.

Senshukai merchandise is sold at Daimaru andMatsuzakaya dept. stores
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JFR merchandise is sold on the Senshukai retail website

26

Topics

Acquisition of PLANETWORK CO.,LTD.
In March, Senshukai aquired from OG Capital Co., Ltd., a subsidiary of
Osaka Gas Co., Ltd., all shares of PLANETWORK CO., LTD.
PLANETWORK has a house wedding business and other activities. The
company has two facilities in the Osaka suburb of Suita, Mia Via andGeihinkan, which is located in the EXPO '70 Commemoration Park.
Acquiring PLANETWORK gives Senshukai a stronger position in the
Kansai region, where more locations were needed as part of theestablishment of a nationwide network of wedding facilities. These two
Osaka area locations will be key elements of the growth strategy for
the wedding business.

Mia Via
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A garden wedding at Geihinkan

27

Senshukai's CSR Activities in 2Q Fiscal 2015

Using donations from customers to support worthy causes

Post-quake Reconstruction Support
Ishinomaki Child Raising Festival
This is the third year that Senshukai has provided to support for Baby Smile
Ishinomaki, a non-profit organization operating mainly in Ishinomaki in
Miyagi prefecture. By working with local governments and organizations,
Senshukai has used donations and other measures to back up the important
programs of Baby Smile Ishinomaki.

Senshukai’s family photo corner at
a Baby Smile Ishinomaki event

In June, Senshukai participated in a child raising event in Ishinomaki byoperating a family photo studio with a professional photographer. Pictures
were taken of 137 families, a total of 369 people.

Environmental Activities
Green Power Classes at 10 Schools
Senshukai and Diamond, Inc. have been sending instructors to schools since2014 to teach lessons about renewable energy. As of March 2015, which
covers the first two phases, classes were held at 10 elementary schools
throughout Japan. More of these classes are planned in order to giveparents and their children an opportunity to think about the importance of
renewable energy.
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Renewable energy classes

28

Dividend Forecast and Earnings Announcements Scheduled in Fiscal 2015
Dividend Forecast
The Senshukai Group’s basic policy for dividends is to return earnings to shareholders appropriately
in a manner that reflects results of operations. We will maintain stable dividends that take into
account the payout ratio as well as the need to use retained earnings to build a stronger foundation
for business activities.
In the forecast announced on February 5, 2015, the forecast for the dividend applicable to 2015 was
16 yen, the sum of 8 yen interim and year-end dividends. However, due to the revisions to the firsthalf and 2015 forecasts and other considerations, the interim dividend has been reduced to 4 yen
and the forecast for the year-end dividend has been lowered to 4 yen.

Schedule for Earnings Announcements
 October 30, 2015 (Friday)

Announcement of financial results for the third quarter of Fiscal 2015

 February 4, 2016 (Thursday)

Announcement of financial results for Fiscal 2015

 February 5, 2016 (Friday)

Earnings presentation for Fiscal 2015 (Tokyo)

The forward-looking statements contained in this earnings presentation are based on informationthat was available at the time of the release of this presentation. Actual results could differ
significantly from these projections due to a variety of factors.

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29