SENSHUKAI CO.,LTD. (Tokyo Stock Exchange, First Section: 8165)
Fiscal 2018 Earnings Presentation
February 8, 2019

Contents

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1

Consolidated Results of Operations for Fiscal 20182

Overview by Segment

3

Consolidated Earnings Outlook for Fiscal 20194

Medium‐term Management Plan 2019‐2021

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Consolidated Results of Operations for Fiscal 20183

Fiscal 2018 Consolidated Statement of Income (YoY Comparison)(Millions of yen)
2017

2018
% to netsales

YoY change% to netsales

Difference

113,344

Change in% to netsales

Net sales

125,999-12,655

Cost of sales

71,43756.7%

65,01957.4%-6,4180.7%

Gross profit

54,561

43.3%

48,32542.6%-6,236-0.7%

SG&A expenses

58,84846.7%

52,38846.2%-6,460-0.5%

Operating profit-4,287-3.4%-4,063

-3.6%

224

-0.2%

Ordinary profit-4,206-3.3%-4,277

-3.8%

-71

-0.5%

Profit attributable toowners of parent-11,090-8.8%-6,027

-5.3%

5,063

3.5%

Net sales decreased 10.0% year-over-year due to lower sales in the mail-order business despite
higher sales in the bridal, corporates and other businesses.
Operating loss was caused by the sales decrease and a lower cost to sales ratio.
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Fiscal 2018 Consolidated Balance Sheet (YoY Comparison)(Millions of yen)Dec. 31, 2017

Dec. 31, 2018

Difference

Assets• Current assets

48,85440,406-8,447• Non-current assets

41,58635,542-6,044

Total assets

90,44175,949-14,491• Current liabilities

30,066

28,770-1,296• Non-current liabilities18,826

12,326-6,500Total liabilities

48,892

41,096-7,796

41,15535,558-5,596318-789-1,1087484

941,548

34,853-6,69590,44175,949-14,491

Liabilities

Net assets• Shareholders’ equity• Accumulated other comprehensive
income• Non-controlling interests

Total net assets
Total liabilities and net assets
Assets:Decrease in merchandise: ¥6,828 million; Decrease due to sale of Koshien Distribution Center: ¥2,462 million

Liabilities:

Decrease in payables resulting from planned reduction in purchases: ¥4,060 million; repayment and redemption of interest-bearing
debt: ¥1,534 million
Net assets: Increase in treasury shares: ¥6,782 million
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Fiscal 2018 Consolidated Statement of Cash Flows (YoY Comparison)(Millions of yen)
2017
Net cash provided by (used in)operating activities

Net cash provided by (used in)investing activities

1,952

2018

-1,950Difference-3,902

 Loss before income taxes:-6,016

 Depreciation:+1,807

 Decrease in inventories:+6,778

 Decrease in notes and accounts payable-trade:-3,588
 Purchase of property, plant and equipment:-1,997

-397

3,196

3,594

 Sales of property, plant and equipment:+2,527
 Withdrawal of time deposits+2,226

 Proceeds from issuance of common shares:+6,975

Net cash provided by (used in)financing activities-1,148-1,414-265

Cash and cash equivalents atend of period

17,323

17,147-176

 Purchase of treasury shares:-6,785

 Repayments of long-term loans payable:-1,371Senshukai has a committed credit line with the total amount of ¥10 billion with financial institutions andhas a sufficient amount of working capital.

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Fiscal 2018 Consolidated Sales by Business Segment(YoY Comparison)(Millions of yen)2017
2017年度-14.6%

20182018年度

101,279
86,452

6.9%
18,132

19,386

6.8%
33.7%
4,833

5,161
1,753

通販 business
Mail-order

ブライダル
Bridalbusiness

法人businessCorporates

2,343

その他
Others*Others: Childcare support business, services business, manufacturing and sales of cosmetics and other businesses
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Fiscal 2018 Consolidated Operating Profit by Business Segment(YoY Comparison)(Millions of yen)
2017年度
2017

4.3%
-9.5%
963

1,004
375-5,707

339

2018年度
2018

178.3%
80

225-5,633

Mail-order
通販 business

Bridalbusiness
ブライダルCorporates
法人businessOthersその他*Others: Childcare support business, services business, manufacturing and sales of cosmetics and other businesses
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Overview by Segment

9Overview of the Mail-order Business (YoY Comparison)

Net sales (Millions of yen)
Cost to sales ratio (%)

2017

2018

Difference

101,279

86,452-14,827

59.7

61.1

1.4

Main factors

 Increase in share of bargain andclearance sales
 Increase in write-downs
 Decreases in printing, production andcatalog mailing costs due to reductions
in number of catalogs and pages

SG&A expenses (Millions of yen)

47,58440,253-7,331

 Lower depreciation due to asset
impairment
 Cost reduction by reexamining each
expense items

Operating profit (Millions of yen)

-5,707-5,63374

Annual number of active
customers (10,000 members)

323.7

278.4

-45.3Annual number of newcustomers (10,000 members)

75.2

68.6

-6.6

* The annual number of active customers and new customers are non-consolidated data for the mail-order business(excluding the Hanpukai business).
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Overview of the Bridal Business (YoY Comparison)

2017

2018

Net sales(Millions of yen)

18,132

19,3861,254

 New facilities000

18,132

19,386

1,254

Operating profit(Millions of yen)

963

1,004

41

Guesthouses

24240Weddings (Couples)

4,635

4,869

234

Average sales per wedding(10,000 yen)

368.7

373.5

4.8

 Existing facilities

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Main factors

Difference Increase in the number ofweddings at existing facilities
and higher sales per wedding

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Overview of the Corporates Business (YoY Comparison)(Millions of yen)
2017

Net sales

2018

4,833

Main factors

Difference

5,161

327

• Contracting services

3,518

3,777

259

• Sampling

1,038

1,10062• Novelties

259

261

1

• Others

17225

Operating profit

375339-35

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 Increase in orders foroutsourced logistics and callcenter services and consulting
services
 Higher sales to current
clients for outbound callcenter services and growthin new contracts

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Consolidated Earnings Outlook for Fiscal 201913

Fiscal 2019 Consolidated Earnings Outlook (YoY Comparison)(Millions of yen)2018 (Results)

2019 (Forecasts)% to netsales% to netsales

YoY change
Difference

Change in %to net sales

Net sales

113,344

Cost of sales

65,01957.4%

49,90053.1%-15,119-4.3%

Gross profit

48,32542.6%

44,10046.9%-4,225

4.3%

SG&A expenses

52,38846.2%

44,80047.7%-7,588

1.5%

Operating profit-4,063

-3.6%

-700

-0.7%

3,363

2.9%

Ordinary profit-4,277-3.8%-1,100

-1.2%

3,177

2.6%

Profit attributable toowners of parent-6,027

-5.3%

4,300

4.6%

10,327

9.9%

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94,000-19,34414Improvements in Consolidated Operating Profit in 2018

Major components of improvements in consolidated(Billions of yen)operating profit
Consolidated operating loss in 2018

-4.0Lower gross profit due to sales decrease

-3.5
7.1

Improvement in profit➢ Reduction in personnel expenses

3.5
1.4

➢ Head office relocation, reductions in IT system
maintenance expenses, rents and other expenses

0.6➢ Reduction in other SG&A expenses

1.6➢ Elimination of inventory disposal

Senshukai non-consolidated profit

3.6

Profit (loss) in subsidiaries-0.3

Consolidated operating loss in 2019

-0.7

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４ Medium‐term Management Plan 2019‐2021

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Medium-term Management Plan
Changes in externalenvironment• Rapid shift in consumption to EC• Competition intensified as
entrants with newly-structured
business models enter the marketPolicy
Senshukai• Lower operating margin in themail-order business due to afocus on sales volume• Higher operating expenses

Performance deteriorating - particularly in the core mailorder business
Basic Policy of New Medium-term Management Plan
● Realize structural reform of the mail-order business➢ Reconstruct earnings foundation➢ Strengthen sales capabilities with a new marketing strategy● Maximize corporate value as a group➢ Reinforce mail-order, bridal, childcare support, and corporates businesses
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Medium-term Management PlanThree-year Initiatives

Net sales: Lower sales due to business-scale optimization
Operating profit: Aiming for operating profit of ¥4 billion in 2021
Net sales

100113.3(Billions of yen)
Operatingprofit

92.0

94.0

5

Operatingprofit¥4 billion
500

-0.7
-4.0020182019

Build the foundations
for regrowth

Sow the seeds forregrowth• Reorganize businessdomains• Optimize business scale• Streamline organizational
and personnel structures• Reorganize groupcompanies• Reduce cost—dispose noncore assets
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• Marketing tailored tolife stage• Maximize the strengthsof our catalogs• Review development,production andprocurement structures

2020

2021

-5

Manifestation of results/Regrowth• Start from the first point of contact with “childcare,”and stay close for a long time through all the lifestage changes that follow thereafter• Establish a stable profit structure by offering
differentiated original products• Maximize synergies within the group and expand
earnings foundation including new businesses

18Mail-order Business Marketing Policy
Evolve into a model which provides values for customers’ life events and needs fora long time, centering on the “childcare” stage and the “self-improvement” stage,
which are the mainstays of our customer base

Customers

Events,needs(examples)

Valueoffered(examples)Strengthen
firstcontact
strategyChildcare

Coordination
across life stages

First contact with Belle Maison membersChildcare
JuniorChildcare(Elementary high(Maternity, Baby, Kids)
school)schoolUtility/Functionality

Fashionfor moms

Buyinga homeWorld
SupportDesign/ Functionality/view/for
Functionality
DesignCoordination
eventsMerchandise

Planning

Self-improvement*
Belle Maison fan volume zone

Job
Children’stransfer/ independence Body-type Age-related Returning Going out(Renovation
Movingchangechangeto work on holidaysof house)house

Utility/
Productline-up

Customer
contact

World view/
Coordination

Utility/
Functionality

DesignSales
promotion

Clarify the relationship between customers’ “needs” and the “value offered,” and thoroughly ensure thatthe product line-up and communications reflect the relationship* “Self-Improvement”: Internal definition for a segment that searches for a new lifestyle and own sense of personality outside the “childcare” stage
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19Life Event Business/Peripheral Businesses
Build earnings foundation and achieve growth, not justin the mail-order business but in our other businesses
as well

Service businesses designed to help women live through thebiggest changes in their lives: marriage, pregnancy, childbirth,and parenting, with a smile

Corporates

Bridal

MailorderChildcare
supportOthersBridal· Strengthen sales capabilities and develop peripheral businesses· Reinforce earnings foundation through renewal of existing facilities

Childcare Support

・ Promote safe and secure nursery school management
・ Start peripheral businesses (after school care, etc.) that pursue
added value

Businesses based on the Senshukai’s recognition and trustworthinessCorporates
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・ Strengthen the contracted business by utilizing know-how in themail-order business・ Improve efficiency of product sales and advertising businesses
20Dividend Forecast and Earnings Announcements Scheduled in Fiscal 2019
Dividend Forecast
Senshukai’s policy regarding dividends is to distribute earnings to shareholders in a manner thatreflects its performance. Furthermore, the policy is to pay stable dividends that take into account thepayout ratio while reflecting the need to use retained earnings to strengthen the company’s foundation
for business operations.
Because of the consolidated and non-consolidated net losses in 2018, we plan to pay no ordinary
dividend for 2018.
We plan to pay no interim dividend in 2019 and have not made a decision about the year-end
dividend. Our highest priorities are the implementation of our medium-term management plan and thegrowth of shareholders’ equity from the standpoint of the stability and safety of business operations.
We will work diligently to deliver stable dividends to our shareholders as soon as possible.

Schedule for Earnings Announcements
 April 25, 2019 (Thursday)

Announcement of financial results for the first quarter of Fiscal 2019 July 25, 2019 (Thursday)

Announcement of financial results for the second quarter of Fiscal 2019 July 26, 2019 (Friday)

Earnings presentation for Fiscal 2019 (Tokyo)

 October 25, 2019 (Friday)

Announcement of financial results for the third quarter of Fiscal 2019

The forward-looking statements contained in this earnings presentation are based on
information that 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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Senshukai will continue to be a “Women’s Smiles Company”

Women’s Smiles Company

Smiles are the creator of happiness.
A smile on one face, and then another, is a promise of a brighter tomorrow.

Senshukai is a company that delivers smiles to women’s daily lives,and by doing so, makes the world happy.

Since its establishment in 1955, Senshukai has always operated businesses that encompass
every stage of a woman’s life, including finding employment, marriage, child-birth and othermajor events.
Once again, we will return to our customer-oriented origins and accomplish a decisive reformof our business structure.
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