Senshukai Co., Ltd.
Fiscal 2012 Earnings Presentation
February 8, 2013

Contents

1.

Results of Consolidated Operations for Fiscal 20122.

Overview by Segment

3.

Consolidated Earnings Outlook for Fiscal 20132

1.

Results of Consolidated Operations
for Fiscal 20123

Consolidated Results of Operations for Fiscal 2012 (YoY Comparison)(Millions of yen)

Fiscal 2011

Fiscal 2012

% to netsales% to netsales

YoY change
Difference

Percentage
pointsUp 6.2%

Net sales

137,261

Cost of sales

71,31152.0%

76,392

52.4%

5,081

0.4%

Gross profit

65,95048.0%

69,357

47.6%

3,407

-0.4%

SG&A expenses

62,84245.8%

67,248

46.2%

4,406

0.4%

Operating income

3,107

2.3%

2,109

1.4%

-998

-0.9%

Ordinary income

3,233

2.4%

2,765

1.9%

-468

-0.5%

Net income

1,583

1.2 %

2,029

1.4%

446

0.2%

Net income per share
(yen)

36.56

46.86

10.3

Return on equity

3.9%

4.7%

0.8%

145,7508,489

4

Consolidated Balance Sheet for Fiscal 2012 (YoY Comparison)(Millions of yen)Dec. 31,2011

Dec. 31,2012

Difference

Current assets

44,482

46,248

1,766

Accounts receivable-other: +¥1.1bn
Forward exchange contracts: +¥700mn

Noncurrent assets

45,95946,639680

Property, plant and equipment: +¥1.7bn
Intangible assets: -¥600mn

Total assets

90,441

92,887

2,446

Current liabilities

41,24437,062-4,182

Forward exchange contracts: -¥1.9bn
Notes and accounts payable-trade: -¥1.2bn
Short-term loans payable: -¥400mn

Noncurrent liabilities

7,753

10,892

3,139

Long-term loans payable: +¥3.0bn
Bonds payable: -¥700mn

Total liabilities

48,99747,955-1,042

Shareholders’ equity

50,91052,203

1,293

Retained earnings: +¥1.2bn

Accumulated othercomprehensive income-9,465-7,271

2,194

Deferred gains or losses on hedges: +¥1.6bn
Valuation difference on available-for-salesecurities: +¥400mn

Total net assets

41,44444,932

3,488

Total liabilities
and net assets

90,441

92,887

2,446

AssetsRemarks

Liabilities

Net assets

5Consolidated Statements of Cash Flows for Fiscal 2012 (YoY Comparison)(Millions of yen)

Fiscal2011

Net cash provided by(used in) operating activities

448

Fiscal2012

2,337

Difference

1,889

Net cash provided by(used in) investing activities-2,077-3,606-1,529Net cash provided by(used in) financing activities-1,727991

2,718

Cash and cash equivalents at
end of period

7,500

7,452

-48

Fiscal 2012 highlights
Income before income taxes and minority interests:+¥2.4bn
Depreciation: +¥2.7bn
Increase in other current assets: -¥1.3bn
Decrease in notes and accounts payable-trade:-¥1.2bn
Purchase of property, plant and equipment: -¥2.5bn
Purchase of intangible assets: -¥1.1bn

Proceeds from long-term loans payable: +¥5.7bn
Repayment of long-term loans payable: -¥1.6bn
Decrease in short-term loans payable: -¥1.5bn

6

Net Sales by Consolidated Business Segment for Fiscal 2012 (YoY Comparison)(Millions of yen)
+5.7%
Fiscal 2011

123,405

Fiscal 2012

130,456+21.3%
10,1978,407-7.8%
4,159 3,833-2.1%
1,289 1,262

Mail-orderbusiness

Bridalbusiness

Corporates
business

OthersMail-order business: Sales rose due to cross-media promotions and strong Internet sales
Bridal business: Sales rose due to the opening of new guesthouses
Corporates business: Sales declined due to the end of contract with major outsourcing client

7

Consolidated Sales by Product Category for Fiscal 2012 (YoY
Comparison)(Millions of yen)
+7.7%
Fiscal 2011

Fiscal 2012

58,88254,648

+9.4%

+8.8%

29,50932,28518,706

14,010 15,240

+8.0%

-2.3%
18,283-13.0%

15,839 17,101

4,547 3,958

ApparelFashionaccessories

Interior
goods

Household
goods

Foods

OthersApparel: Strong sales of overall women’s apparel (outerwear/underwear), maternity wear,
and baby clothes
Interior goods: Strong sales of fabrics and bedding

8Trend in Monthly Consolidated Sales for Fiscal 2012 (YoY Comparison)Monthly Consolidated Sales

114.7%
111.9%
109.5%

110.0%

109.7%
107.4%
104.5%

107.6%
103.7%

102.7%

YoY
100%

99.2%

Jan.

Feb.

Mar.

Apr.

May

97.1%

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Sales increased due to cross-media promotions and further strong Internet sales
The number of active customers exceeded 4 million!
Sales of summer wear were weak in May, and autumn wear in October, due to unfavorable weather,but otherwise sales were comparatively firm92. Overview by Segment

Sales and Earnings by Segment in Fiscal 2012 (YoY Comparison)(Millions of yen)

Mail-order businessNet sales
Operating income

Fiscal 2011

Fiscal 2012

Difference

YoY change

123,405

130,456

7,051

+5.7%

2,183

994

-1,189-54.4%

8,407

10,1971,790+21.3%

482

752

270

+55.8%

4,159

3,833

-326

-7.8%

448

396

-52

-11.5%

1,289

1,262

-27

-2.1%

-14

-33

-19

-

Bridal businessNet sales
Operating income
Corporates businessNet sales
Operating income
Others
Net sales
Operating income

Overview of the Mail-order Business (YoY Comparison) *Excluding the Hanpukai business
Fiscal 2011
Annual number of active
customers (10,000 members)
Average sales per customer(Yen)
Annual order frequency per
customer (Times)
Catalog circulation(10,000 volume)
Number of new members(10,000 members)

Fiscal 2012

Difference

375.6

409.1

33.5

10,985

10,563

-422

2.91

2.96

0.05

7,006

6,691

-315

74.2

91.8

17.6

Average sales per product (Yen)

2,738

2,553

-185

Annual order amount (Yen)

32,00631,301-705

Annual Number of Active Customers(10,000 members)

Catalog Circulation

366

376

409

7,681

7,006

6,691

Fiscal 2010

Fiscal 2011

Fiscal 2012

Fiscal 2010

Fiscal 2011

Fiscal 2012

(10,000 volume)

13

Internet-related Indicators and Policies in Fiscal 2012
Internet Sales(including mobile sales)

Smartphone-only Sales(Billions of yen)

81.4
72.6
65.3

17.3

17.9
Sales via
catalog

5,031

Sharp
increase ！

927
Fiscal 2011

Fiscal 2012

Ratio of Internet-based Orders

Rising !

21.7

64.1
Internet-only
sales(Millions of yen)

58.8%

64.8%

Fiscal 2010

Fiscal 2011

67.9%
Fiscal 2012

54.7
October 2012

43.6

Launched "Belle Maison Digital Catalog app"

Includes new features such as playing
videos in the digital catalog app(Fiscal years)

2010

2011

2012
14

Cross-media Activities (Autumn-winter TV Commercials)
Autumn(nationally broadcast October 12-28)

Catalogs placed in 100
yen shops and drugstores

Newspaper inserts
and drugstore leaflets

Winter(nationally broadcast November 16 to December 2)

Added free-shipping campaign
for new website visitors

Free-shipping campaign for new members a hit! Results even exceeded those of last year
when we also broadcast TV commercials

Differences in Cost-of-sales Ratio and SG&A Expenses in the Mail-order Businessfor Fiscal 2012 (YoY Comparison)
Cost-of-sales Ratio

SG&A Expenses(Millions of yen)

+3,660+0.7%
57,621
51.8%

52.5%

Fiscal 2011

Fiscal 2012

Increase in bargain sales
Increase in inventory clearance sales

Fiscal 2011

61,281

Fiscal 2012

Catalog costs:

Higher average paper costs, increase in pages
Growth in production costs from increase inpages [+¥1.11bn]
Selling-related expenses: Increase in cross-media promotion and listing
costs [+¥720mn]
Shipping-related expenses: Increase in shipping and shipping-related
expenses from increase in number of
shipments [+¥1.21bn]
Depreciation expenses:
Increase due to system investments[+¥360mn]

16Overview of the Bridal Business (YoY Comparison)

Fiscal 2011

Fiscal 2012

Difference

8,407

10,197

1,790

Operating income (Millions of yen)

482

752

270

Guesthouses

13

15

2

Weddings (Couples)

2,105

2,594

489

Average sales per wedding(10,000 yen)

390.2

382.7

-7.5

Net sales (Millions of yen)

Net sales and operating income increased year-over-year due to contributions from newguesthouses in Fukuoka and Kagoshima

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

Fiscal 2011
Net sales

Fiscal 2012

Difference

4,159

3,833

-326

2,933

2,656

-277

Sampling

777

785

8

Novelties

355

314

-41

Others

94

78

-16

448

396

-52

Contracting services

Operating income

Contracting services: Net sales decreased year-over-year due to the end of contract with major
outsourcing client18

3. Consolidated Earnings Outlook for Fiscal 2013

Consolidated Earnings Outlook for Fiscal 2013 (YoY Comparison)(Millions of yen)

Fiscal 2012
(Results)

Fiscal 2013
(Initial forecasts)% to netsales% to net
sales

153,000

YoY change
Difference

Percentage
pointsUp 5.0%Net sales

145,750

7,250

Cost of sales

76,392

52.4%

79,026

51.7%

2,634

-0.7%

Gross profit

69,35747.6%

73,973

48.3%

4,616

0.7%

SG&A expenses

67,24846.2%

69,273

45.2%

2,025

-1.0%

Operating income

2,109

1.4%

4,700

3.1%

2,591

1.7%

Ordinary income

2,765

1.9%

5,000

3.3%

2,235

1.4%

Net income

2,029

1.4%

3,700

2.4%

1,671

1.0%

20

Net Sales Outlook by Consolidated Business Segment for Fiscal 2013 (YoY Comparison)(Millions of yen)

+5.0%
130,456

Fiscal 2012 results
Fiscal 2013 forecasts

137,000+13.8%
11,60010,197+1.7%
3,833 3,900-60.4%
1,262

Mail-orderbusiness

Bridalbusiness

Corporates
business

500

OthersMail-order business: Targeting higher sales through further expansion of Internet sales
Bridal business: Targeting higher sales through opening of new facilities

21Topics in Fiscal 2013 (1)Reorganizing “Watashi no Kitai Fuku”
Issue “comprehensive” catalog targetinga wide customer base, and two selectcatalogs
Issue seasonal catalogs
Issue six “just season” catalogs includingcore catalogs “Watashi no Kitai Fuku” andDears Brain’s guesthouse “THE LEAVES
Premium Terrace” opened in Maebashi City,
Gunma Prefecture in March 2013, becoming
the 16th guesthouse!
Opened in POWER MALL Maebashi-minami
A linearly-designed stylish guesthouse withlots of natural light“sumutoco”
22Topics in Fiscal 2013 (2) Consolidation of Bonded Warehouses Overseas
New warehouse in Pusan port FTZ (free trade zone)

Current status of logistics sites

Targeted status of future logistics sites

Of the eight overseas production sites, bonded storage is
implemented at six sites (seven warehouses)
3-24 day transportation LT from overseas bonded
warehouses to domestic shipment warehouses
Three main logistics sites in Japan:-Chubu Distribution Center (Kani, Gifu)-Kanuma Distribution Center (Kanuma, Tochigi)-Koshien Distribution Center (Nishinomiya, Hyogo)

Consolidate bonded storage of all overseas
production sites to one site in Pusan
1-2 day transportation LT from overseas bonded
warehouse to domestic shipment warehouses
Reduce total logistics costs by minimizing domestic
inventory

Senshukai Group’s CSR Activities in Fiscal 2012
Support of “Pink Ribbon” campaign
October 21: Cooperated with Smile Walk Kobe; opened a boothHeld raffle, handed out 1,900 of mini labo’s original mascot “Pink LoveCat” as consolation prizes, and distributed 3,300 educational leaflets
October 7: Staged "Yu Sakai premium live"
Opened booth. Handed out 900 mascots, and distributed
educational leaflets
October (Pink Ribbon month):
Distributed 1,000 free mammography coupons issued
by the Japan Cancer Society

Organic cotton project
Widely promoted eco-friendly policies
centered on "Organic Cotton Promotion
Campaign" products sold in thesundries/interior catalog "sumutoco” fromJune

(included inserts inpackages, on boxes,
at campaign website,e-mails, etc.)

Post-quake reconstruction support
Carnation present on Mother's Day
On May 9-11, following the idea of subsidiary
Senshukai Iihana, Senshukai and Saito Seika,a treats supplier that incurred
damage from the earthquake,delivered carnation plants andtreats (Kamome no tamago) toall 1,800 temporary homes in
Ofunato City

24

Trend and Plan in Capital Expenditures and Depreciation Expenses
Capital Expenditures(Millions of yen)

Depreciation Expenses(Millions of yen)

4,602

2,733
2,503

882

2,624

2,873

2,404

2,343

Fiscal
2010

Fiscal
2011

2,695

3,046
2,314

Intangible
assets971

Property,plant andequipment

1,652

Fiscal
2009

1,546

1,326

Fiscal
2010

2,085

3,720

1,360

961
Fiscal
2011

954

Fiscal
2012

Fiscal2013 (fct.)

Fiscal
2009

FiscalFiscal2012 2013 (fct.)

Property, plant and equipment: New facility related costs at Dears Brain to decline in 201325

Schedule of Dividends and Results Announcements
Senshukai’s basic policy regarding dividends is to appropriately return profits to shareholders
by maintaining stable dividends that take into account a payout ratio while at the same timestrengthening the business foundation with retained earnings.
Based on this policy and in light of Fiscal 2012 consolidated results, Senshukai plans to pay a
total annual dividend of 20 yen per share comprised of an interim dividend of 10 yen per
share and a year-end dividend of 10 yen per share, which has been initially planned.
For Fiscal 2013, Senshukai plans an annual dividend of 24 yen per share (12 yen each atinterim and year-end).

April 26 (Friday)

Earnings for the First quarter of Fiscal 2013

July 25 (Thursday)

Earnings for the Second quarter of Fiscal 2013

July 26 (Friday)

Earnings Presentation for the second quarter of Fiscal 2013 (Tokyo)

October 25 (Friday) Earnings for the Third quarter of Fiscal 2013

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

26

Senshukai’s Corporate Vision

Woman Smile Company

Everyday happiness
The "good morning!" that wells up from within as I take a deep breath of the fresh morning air.
The excitement as I put my arms through the sleeves of the new jacket I wanted.
The thrill as I wait for the bread that I baked for everyone to finish cooking.
These are everyday moments of happiness.
Senshukai wants to provide products and services that bring smiles to people's faces.
This is why we will carefully focus on what is important, and pay close attention to non-visual details, as wepainstakingly develop new products.