Summary of Financial Results for the Third Quarter of Fiscal Year 2020
(Nine Months Ended September 30, 2020)[Japanese GAAP]
October 30, 2020

Company name: SENSHUKAI CO.,LTD.

Stock exchange: Tokyo Stock Exchange, First Section
8165
URL: https://www.senshukai.co.jp
Mr. Kenji Kajiwara, President and Representative Director
Mr. Tetsuya Takahashi, Director, General Manager, Corporates Headquarters
Tel: +81-6-6881-3220
Scheduled date of filing of Quarterly Report: November 13, 2020
Scheduled date of payment of dividend: Preparation of supplementary materials for quarterly financial results: None
Holding of quarterly financial results meeting: None
Stock code:
Representative:
Inquiries:(All amounts are rounded down to the nearest millions of yen)

1. Consolidated Financial Results for the 3rd Quarter of 2020 (January 1, 2020 – September 30, 2020)(1) Consolidated operating results (cumulative)(Percentages represent changes from the same period of the previous fiscal year)
Profit attributable toOperating profit
Ordinary profit
owners of parent

Net sales

Millions of yen%

3Q 2020
59,502(8.4)(1,075)
3Q 2019
64,980 (19.8)
1,257
Note: Comprehensive income (millions of yen) 3Q 2020: (5,336) (-%)

Millions of yen%-

Millions of yen

Net income per share

Diluted net income per share

Yen

Yen

(126.15)
208.32158.01

3Q 2020
3Q 2019%

Millions of yen%(5,070)8,372-(4,577)
1,666
3Q 2019: 7,908 (-%)

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Equity ratio

Millions of yen

3Q 2020
60,32728,970Fiscal Year 201973,66442,490
Reference: Shareholders’ equity (millions of yen) 3Q 2020: 28,970

Net assets per share
%

Yen

48.0
57.7
Fiscal Year 2019: 42,490

720.82880.56

2. Dividends
1Q-endDividend per share
3Q-end2Q-endYen

Yen

Year-end

Yen

Total
Yen

Yen

Fiscal Year 2019
0.00
2.00
2.00
Fiscal Year 2020
0.00
Fiscal Year 2020 (forecasts)
0.00
0.00
Notes: 1. Revision to the most recently announced dividend forecast: Yes
For more information, please refer to “Notice of Revisions to Consolidated Outlook and Dividends (Dividend
Suspension)” (Japanese version only) that was announced today (October 30, 2020).
2. The dividend figures above show dividends for common shares. Please refer to “Dividends of classified stock” (after mentioned) for information on dividends for shares whose rights are different from those of the Senshukai commonshares.

3. Consolidated Outlook for Fiscal Year 2020 (January 1, 2020 – December 31, 2020)(Percentages represent changes from the same period of the previous fiscal year)
Profit attributable to Net income per
Operating profit
Ordinary profit
owners of parent
share

Net sales
Millions of yen%

Millions of yen% Millions of yen% Millions of yen%

Yen

Full Year 2020
82,000 (8.0)(1,300)(4,800)(5,300)(127.85)
Notes: Revision to the most recently announced consolidated outlook: Yes
For more information, please refer to “Notice of Revisions to Consolidated Outlook and Dividends (Dividend
Suspension)” (Japanese version only) that was announced today (October 30, 2020).

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): None
(2) Application of special accounting methods for presenting quarterly consolidated financial statements: Yes
Note: Please refer to “2. Quarterly Consolidated Financial Statements and Notes, ( 3) Notes to Quarterly Consolidated
Financial Statements (Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial
Statements)” on page 9 for further information.

(3) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others: None
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting-based estimates: None
4) Restatements: None

(4) Number of shares outstanding (common shares)
1) Number of shares outstanding at the end of the period (including treasury shares)
3Q 2020:52,056,993 sharesFiscal Year 2019:52,056,993 sharesFiscal Year 2019:11,865,448 shares

3Q 2019:

40,190,904 shares

2) Number of treasury shares at the end of the period
3Q 2020:

11,865,733 shares

3) Average number of shares outstanding during the period
3Q 2020:

40,191,445 shares

Note: 173,400 shares of Senshukai stock, which were held by the trust for the stock compensation plan that is linked toresults of operations and cancelled on June 21, 2019, are included in the number of treasury shares, and is deductedfrom the number of shares that is used to calculate the average number of shares outstanding during 3Q 2019.
* This quarterly financial report is not subject to quarterly review by certified public accountants or auditing firms.
* Cautionary statement with respect to forward-looking statements
Cautionary statement with respect to forecasts
The above projections are based on information available at the time of release of this report. Actual results could differ
significantly from these projections due to a variety of factors. For further details regarding the projections, please refer to page4, “1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecasts andOther Forward-looking Statements.”(Reference) Dividends of classified stock
Dividends per share for classified stock with rights that differ from those of common shares are shown below.
On July 31, 2020, Senshukai purchased all of the following classified stock pursuant to Article 178 of theCompanies Act by exercising its right to acquire this stock for a cash payment.
Class A preferred stock

1Q-endDividend per share
3Q-end2Q-endYen

Yen

Year-end

Total

Yen

Yen

Yen

Fiscal Year 2019
20,000,000.00
Fiscal Year 2020
0.00
Fiscal Year 2020 (forecasts)
Notes: 1. Five shares of the Class A preferred stock were issued on March 30, 2018.

20,000,000.00

40,000,000.00

-

0.00

2. The dividends for the Fiscal Year 2019 were partially paid from the capital surplus. Please see “Breakdown ofdividends paid from the capital surplus” below for more information.
Class B preferred stock

1Q-endDividend per share
3Q-end2Q-endYen

Yen

Fiscal Year 2019
Fiscal Year 2020
Fiscal Year 2020 (forecasts)
Note: Nine shares of Class B preferred stock were issued on March 30, 2018.

Year-end

Total

Yen

Yen

Yen

-

-

-

-

-

(Reference) Breakdown of dividends paid from the capital surplus
Of the dividends for the Fiscal Year 2019, breakdown of dividends paid from the capital surplus is shown below.
Record date2Q-endDividend per share (Yen)
20,000,000.00
Total dividends (Millions of yen)100
Note: Reduction rate in net assets due to the dividends paid from net assets

2Q-end: 0.003

Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance2(1) Explanation of Results of Operations

2(2) Explanation of Financial Position

3(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements

4

2. Quarterly Consolidated Financial Statements and Notes

5(1) Quarterly Consolidated Balance Sheet

5(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
Income7

Quarterly Consolidated Statement of Income(For the Nine-month Period)

7

Quarterly Consolidated Statement of Comprehensive Income(For the Nine-month Period)(3) Notes to Quarterly Consolidated Financial Statements

89(Going Concern Assumption)

9(Significant Changes in Shareholders’ Equity)

9(Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements)

9(Additional Information)

9(Segment Information)

10(Significant Subsequent Events)

11

3. Other
Important Information about Going Concern Assumption

14
14

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the first nine months (January 1 to September 30) of 2020, there was a steep downturn of the Japanese economy
as COVID-19 impacted consumer spending and economic activity. Although the economic activity slowly resumed
after the end of the state of emergency, there are still concerns about the spread of COVID -19. The outlook for the
economy remains unclear as a result.
In Japan’s retail industry, the new life style created by the COVID-19 crisis has dramatically altered the structureof consumer spending. Most significant is reductions in spending by people visiting stores and in the number ofsales events that attract large numbers of people and an increase in consumer spending linked to the need to stay athome. Companies in the retail sector must determine the best ways to adapt to this shift in the structure of consumer
spending.
In Japan’s wedding industry, the business climate continues to be extremely difficult because of COVID-19. People
are becoming increasingly careful about avoiding closed spaces, crowded places and close -contact settings andstaying away from banquets and other events attended by a large number of people.
In the mail-order and online shopping business, improvements are steadily emerging in the first nine months due tothe benefits of business structural reforms based on the current medium-term management plan. For example,
substantial investments for activities to attract customers have been successful and constant operational reforms
have increased the gross profit margin. This business also benefited from new categories of demand linked with theneed for people to stay home. The result was higher sales and earnings in the mail-order and online shopping
business. In the bridal business, sales fell sharply from the same period of the previous fiscal year because of theenormous change in the business climate caused by increasing concerns about COVID-19. A large number of
weddings and receptions scheduled for the second quarter of 2020 were postponed and a recovery that started inJuly has been very slow.
Net sales in the first nine months of 2020 were down 8.4% year-over-year to 59,502 million yen. There was an
operating loss of 1,075 million yen compared with an operating profit of 1,257 million yen in the first nine monthsof 2019. Ordinary loss was 4,577 million yen compared with a profit of 1,666 million yen one year earlier due tothe share of loss of entities accounted for using the equity method. The loss attributable to owners of parent was
5,070 million yen compared with a profit of 8,372 million yen in the first nine months of 2019, when a gain on
sales of non-current assets, a gain on sales of investment securities and other items were re corded as extraordinary
income.
Business segment performance was as follows.
(Mail-order and Online Shopping Business)
Consolidated sales in the mail-order and online shopping business, which is primarily the catalog and the Internet
businesses, increased 9.0% year-over-year to 48,869 million yen in the first nine months. There was an operating
profit of 1,763 million yen compared with a profit of 142 million yen in the first nine months of 2019.
Many activities for rebuilding the customer base succeeded in stopping the decline in the number of customers
making purchases in the core Belle Maison business. In the first nine months of 2020, the number of these customers
was about 25% higher than in the same period of 2019. One activity was reexamining how to contact customers
who have not made a purchase for a certain length of time or who have made only one purchase in order to transformthese people into regular buyers of Belle Maison merchandise. Another activity was studying from the perspectiveof customers the items people are buying in association with staying home due to COVID -19 and new categories
of demand created by the shift in life styles caused by this crisis. We are using these activities to increase the numberof products that incorporate ideas for improving how people are living during this crisis. Examples are householdproducts that make life more pleasant and convenient and children’s products that help parents enjoy the time they
spend with their children. The performance of this business also benefited from operational reforms that reduced
costs. Due to these activities, sales and earnings were much higher than one year earlier.

(Bridal Business)
Consolidated sales in the bridal business, centered on the house wedding business, decreased 65.0% year-over-year
to 5,164 million yen. There was an operating loss of 3,333 million yen compared with a profit of 667 million yen
in the first nine months of 2019.
The big downturns in sales and earnings compared with one year earlier were caused by wedding and reception
postponements and the suspension of most sales activities because of COVID-19. We believe there is also a needto adapt to the change in people’s attitudes about weddings and receptions because the effects of this crisis willprobably continue until the pandemic comes to an end. Consequently, this business will constantly work on reducing
selling, general and administrative expenses and on using these expenses more efficiently. There are also hygiene
measures to enable people to use our wedding and reception facilities with confidence and steps to meet the new,more diverse needs of couples, such as by holding small weddings. The goal is to use these measures for responding
to challenges created by COVID-19 in order to improve the performance of the bridal business.
(Corporates Business)
Consolidated sales in the corporates business, which provides products and services to corporations, increased 3.9%
year-over-year to 3,805 million yen. Operating profit increased 20.6% to 362million yen.
During the first nine months, this business focused on adding new customers and increasing sales to current
customers. This resulted in acquisition of new customers in novelties business and h igher sales in the samplingbusiness, which provides services such as attaching direct mail marketing messages to p ackages used to deliverproducts, making a big contribution to the sales growth of this business.
(Insurance and Credit Card Business)
This business provides information mainly to Belle Maison members about insurance policies and about credit
cards with the best reward points. Consolidated sales decreased 26.9% year-over-year to 305 million yen andoperating profit decreased 42.3% to 131 million yen.
In the insurance business, we reviewed our channels for sales activities and started using new sales methods during
the first nine months, such as coordination with the bridal business and activities targeting families raising children.
However, sales and earnings decreased from the same period of the previous fiscal year because we did not conduct
sales activities due to COVID-19. Sales activities gradually restarted after the state of emergency was lifted, but
the number of new customers will probably decrease due to the inability to conduct face-to-face consultations, holdinsurance seminars and use other sales activities with direct customer contact until this crisis ends.
(Others)
Consolidated sales in other businesses, which include childcare support business and manufacturing and sales ofcosmetics, increased 2.3% year-over-year to 1,357 million yen. There was an operating loss of 0 million yen
compared with a loss of 80 million yen in the first nine months of 2019.
In the childcare support business, the two nursery schools that opened in April 2019 as well as the after school childcare business, which was started as a peripheral business for more added value, are all performing well.
(2) Explanation of Financial Position(Balance sheet position)
Assets totaled 60,327 million yen at the end of the third quarter of 2020, a decrease of 13,336 million yen from theend of 2019.
Current assets decreased 8,167 million yen to 34,126 million yen. The factors included decreases of 7,329 million
yen in cash and deposits and 1,052 million yen in accounts receivable-other. Non-current assets decreased 5,169
million yen to 26,200 million yen. The factors included decreases of 843 million yen in property, plant andequipment and 4,799 million yen in investments and other assets, while there was an increase of 474 million yen in
intangible assets.
Current liabilities increased 292 million yen to 20,386 million yen. The main factor was an increase of 2,946 million
yen in short-term borrowings, while there was a decrease of 2,312 million yen in other. Non-current liabilities
decreased 108 million yen to 10,969 million yen. The main factor was a decrease of 674 million yen in other, while
there was an increase of 559 million yen in long-term borrowings.
Net assets decreased 13,520 million yen to 28,970 million yen. The factors included booking of loss attributable toowners of parent of 5,070 million yen and a decrease of 8,005 million yen in capital surplus because five shares ofClass A preferred stock and nine shares of Class B preferred stock were purchased and canceled on July 31, 2020
under July 30, 2020 Board of Directors’ resolution. As a result, the equity ratio was 48.0%.
(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements
The consolidated forecast for 2020 was withdrawn on April 27, 2020 and had not been determined because of theinability to determine a reliable forecast due to the effects of the COVID-19 crisis. We are now announcing aforecast that is based on our recent performance and information and projections that are currently available.
For more information, please refer to “Notice of Revisions to Consolidated Outlook and Dividends (Dividend
Suspension)” (Japanese version only) that was announced today (October 30, 2020).

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Millions of yen)
3Q 2020(As of Sep. 30, 2020)

Fiscal Year 2019
(As of Dec. 31, 2019)
AssetsCurrent assets
Cash and deposits

22,713

15,383

Notes and accounts receivable-trade

3,854

4,141

Merchandise and finished goods

8,641

8,381

Accounts receivable-other

5,285

4,232

Other

1,947

2,099

Allowance for doubtful accounts

(148)

(111)

42,29334,126

Buildings and structures, net

11,703

10,962

Land

6,809

6,809

833

730

19,346

18,502

1,483

1,248

944

1,653

2,427

2,901

Investment securities

6,046

2,103

Other

3,694

2,813

Allowance for doubtful accounts

(143)

(120)

Total current assets
Non-current assets
Property, plant and equipment

Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets

Total investments and other assets
Total non-current assets
Total assets

9,596

4,796

31,37026,20073,66460,327

(Millions of yen)
3Q 2020(As of Sep. 30, 2020)

Fiscal Year 2019
(As of Dec. 31, 2019)
Liabilities
Current liabilities
Electronically recorded obligations-operating

6,523

6,056

Accounts payable-trade

3,495

3,713

Short-term borrowings

1,240

4,186

Income taxes payable

107

46

Provision for sales promotion expenses
Provision for bonuses for directors (and otherofficers)
Provision for bonuses

225

209

23

-

233

242

Other

8,244

5,931

Total current liabilities

20,094

20,386

Non-current liabilities
Long-term borrowings

8,558

9,117

Retirement benefit liability

3

4

Asset retirement obligations

851

856

Other

1,665

991

Total non-current liabilities

11,078

10,96931,17331,356

Total liabilities
Net assets
Shareholders’ equity
Share capital

100

100

Capital surplus

39,544

31,539Retained earnings

10,891

5,644

Treasury shares(6,800)(6,800)Total shareholders’ equity

43,73630,482366

181

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

49

(32)

(1,516)(1,516)

Foreign currency translation adjustment

(120)

(144)

Remeasurements of defined benefit plans

(24)

-

(1,245)(1,511)42,49028,97073,66460,327

Revaluation reserve for land

Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
Income(Quarterly Consolidated Statement of Income)(For the Nine-month Period)
3Q 2019(Jan. 1, 2019 – Sep. 30, 2019)
64,980(Millions of yen)
3Q 2020(Jan. 1, 2020 – Sep. 30, 2020)
59,502

Cost of sales

32,35029,602Gross profit

32,63029,899Selling, general and administrative expenses

31,37230,975

Operating profit (loss)

1,257(1,075)Interest income

18

16

Dividend income
Share of profit of entities accounted for using equity
methodGain on adjustment of account payable

22

28

219

-

206

163

Net sales

Non-operating income

Reversal of allowance for doubtful accounts

058

Subsidy income

0

304

Other

158

85

Total non-operating income

624

655

97

103

-

3,530

29

361

Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity
methodCommission expenses
Other

88

162

Total non-operating expenses

215

4,157

1,666

(4,577)

Gain on sales of non-current assets

5,622

-

Gain on sales of investment securities

926-

Gain on sales of shares of subsidiaries and associates

336-

Subsidy income

255

18

-

13

7,141

32

69

14

230

18

1

140

Loss on valuation of investment securities-

38

Loss on sales of shares of subsidiaries and associates

4-

Business structure reform expenses

25-

Loss on disaster

7

14

Other

20

-

Ordinary profit (loss)
Extraordinary income

Gain on change in equity
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Loss on tax purpose reduction entry of non-current
assetsImpairment loss

Total extraordinary losses

361

226

Profit (loss) before income taxes

8,446(4,771)

Income taxes

74

298

Profit (loss)

8,372(5,070)

Profit attributable to non-controlling interests--

Profit (loss) attributable to owners of parent

8,372(5,070)(Quarterly Consolidated Statement of Comprehensive Income)(For the Nine-month Period)
3Q 2019(Jan. 1, 2019 – Sep. 30, 2019)(Millions of yen)
3Q 2020(Jan. 1, 2020 – Sep. 30, 2020)

8,372(5,070)

Valuation difference on available-for-sale securities

(298)

(182)

Deferred gains or losses on hedges

(45)

(59)

2

(0)

(122)

(23)

(463)

(266)

7,908

(5,336)

7,908(5,336)

Profit (loss)
Other comprehensive income

Foreign currency translation adjustment
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparent(3) Notes to Quarterly Consolidated Financial Statements(Going Concern Assumption)
Not applicable.
(Significant Changes in Shareholders’ Equity)
Five shares of Class A preferred stock and nine shares of Class B preferred stock were purchased and canceled on
July 31, 2020 under July 30, 2020 Board of Directors’ resolution. This process decreased the capital surplus by
8,005 million yen in the first nine months of 2020. The result of all these measures was capital surplus of 31,539
million yen at the end of the third quarter of 2020.
(Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements)(Calculation of tax expense)
Tax expenses are calculated by first determining a reasonable estimate of the effective tax rate after the applicationof tax effect accounting with respect to profit before income taxes for the fiscal year that includes the applicable
quarter and multiplying the profit before income taxes for that quarter by that rate. However, Senshukai uses
legally stipulated effective tax rates to calculate tax expenses when the use of estimated tax rates produces a clearly
irrational result.
(Additional Information)(Application of tax effect accounting associated with the transition from the consolidated taxation system to thegroup tax sharing system)
Senshukai and its consolidated subsidiaries are transitioning to the group tax sharing system that was created by
the Act on Partial Amendments to the Income Tax Act, etc. (Act No. 8 of 2020) and, in conjunction with thistransition, has reexamined items concerning the non-consolidated taxation system. With respect to this transition
and reexamination, Senshukai and some of its subsidiaries in Japan have not used the provisions of Paragraph 44
of Implementation Guidance on Tax Effect Accounting (Accounting Standards Board of Japan (ASBJ) Guidance
No. 28, February 16, 2018) in accordance with the treatment in Paragraph 3 of Practical Solution on the Treatment
of Tax Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing
System (ASBJ Practical Issues Task Force (PITF) No. 39, March 31, 2020). As a result, deferred tax assets anddeferred tax liabilities are based on the tax law prior to these amendments.
(Uncertainty of accounting estimates)
The bridal business has reduced operating hours or temporarily closed some locations in order to prevent the spreadof COVID-19 in accordance with requests to stay home and other provisions of the declaration of the state of
emergency of the Japanese government and in response to the increasing number of COVID-19 infections in Japan.
Although the bridal business resumed sales activities following the lifting of the state of emergency on May 25,
the level of activity in this business is unlikely to return to the pre-crisis level soon.
At the end of June, we assumed that COVID-19 would affect the Senshukai Group’s performance until the end of
2020. However, based on information that is currently available, we now believe that this crisis will continue toaffect the performance of the bridal business until at least the end of 2021. After that, we expect this business torecover slowly. We are using these revised assumptions for accounting estimates for the impairment of non -current
assets, the recoverability of deferred tax assets and other items.
We are using the best possible estimates in accordance with information that is currently available. However, ifsome upcoming event alters the impact of this crisis on business operations, there may be an effect on the Senshukai
Group’s financial soundness, results of operations and cash flows.

(Segment Information)
I 3Q 2019 (Jan. 1, 2019 – Sep. 30, 2019)
1. Information related to sales and profit or loss for each reportable segment
Reportable segment
MailInsurance
Othersorder and
Bridal Corporates and credit
onlineSub-total (Note 1)
business business
card
shopping
business
Business

Total(Millions of yen)Amounts
shown onquarterly
Adjustment
consolidated(Note 2)statement ofincome(Note 3)

Net sales
Sales to customers 44,821
14,751
3,663
417
63,654
1,326 64,980
64,980Inter-segment
798
0
0
799
0
799
(799)
sales or transfers
Total
45,62014,752
3,664
417
64,454
1,326 65,780(799)
64,980
Segment profit
142
667
300
227
1,338
(80)
1,257
0
1,257
(loss)
Notes: 1. Others represent the businesses which are not included in any of the four reportable segments and consist of thechildcare support business and manufacturing and sales of cosmetics.
2. The 0 million yen adjustment to segment profit (loss) is an elimination for inter-segment transactions.
3. Segment profit (loss) is adjusted to be consistent with the operating profit on the quarterly consolidated statementof income.

2. Information related to impairment of non-current assets, goodwill, etc. for each reportable segment
No major events or changes occurred.
II 3Q 2020 (Jan. 1, 2020 – Sep. 30, 2020)
1. Information related to sales and profit or loss for each reportable segment
Reportable segment
MailInsuranceorder and
Bridal Corporates and credit
onlineSub-total
business business
card
shopping
businessbusiness

Others(Note 1)

Total

(Millions of yen)Amounts
shown onquarterly
Adjustment
consolidated(Note 2)statement ofincome(Note 3)

Net sales
Sales to customers
48,869
5,164
3,805
305
58,145
1,357
59,50259,502
Inter-segment
197
10
47
254
0
254
(254)
sales or transfers
Total
49,066
5,174
3,853
305
58,4001,357
59,757(254)
59,502
Segment profit
1,763(3,333)362
131(1,076)(0) (1,077)
1(1,075)(loss)
Notes: 1. Others represent the businesses which are not included in any of the four reportable segments and consist of thechildcare support business and manufacturing and sales of cosmetics.
2. The 1 million yen adjustment to segment profit (loss) is an elimination for inter-segment transactions.
3. Segment profit (loss) is adjusted to be consistent with the operating loss on the quarterly consolidated statement ofincome.

2. Information related to impairment of non-current assets, goodwill, etc. for each reportable segment
No major events or changes occurred.

(Significant Subsequent Events)(Capital and business alliance and sale of treasury shares through a third-party allotment)
At the Board of Directors meeting held on September 16, 2020, resolution was approved to establish a capitaland business alliance with East Japan Railway Company (JR East) and to sell treasury shares through the thirdparty allotment to this company. The agreement was signed on the same day.
In accordance with this agreement, the sale of treasury shares to JR East was completed on October 12, 2020.
I. Summary of the capital and business alliance
1. Purpose and reason for the alliance
Since its inception, Senshukai has operated as a “Women’s Smiles Company” that operates businesses associatedwith every stage of women’s lives, including finding employment, marriage, child-birth and other major events.
Major activities are the mail-order and online shopping business, bridal business and childcare support business.
Belle Maison, which is the mail-order and online shopping business, is backed by two key strengths: the ability
to think from the standpoint of women and comprehend women and the ability to translate women’s needs into
products and services. Belle Maison sells a broad line of merchandise, mostly original items, that include apparel,household products, furniture and other goods, and has many female customers of all ages.
In March 2018, Senshukai sold newly issued preferred stock to Regional Economy Vitalization Corporation ofJapan (REVIC), which is managed by REVIC Partners Co., Ltd. as the unlimited liability partner. At the sametime, Senshukai began executing a medium-term management plan that included rebuilding the mail-order andonline shopping business. In 2019, the first year of this plan, operating profit was 772 million yen compared witha loss of 4,063 million yen in 2018, ordinary profit improved from a loss of 4,277 m illion yen to profit of 1,418
million yen, and profit attributable to owners of parent improved from a loss of 6,027 million yen to a profit of
8,182 million yen. As a result, Senshukai achieved the goal of annual profitability earlier than planned.
As this performance demonstrates that there has been progress toward improving profitability, Senshukai
purchased and retired on July 31, 2020 all of the preferred stock that was sold to REVIC. This move will make itpossible to shift toward management that places more emphasis on measures for the growth of business operations.
In addition to these rebuilding measures, there are initiatives aimed at returning to growth. One is a shift in thebasis of studying and executing marketing activities from merchandise to customers. Our catalogs are now
covering many merchandise categories in order to offer different types of merchandise that can precisely matchcustomers’ needs. We are also reinforcing activities to attract more customers by using “#7 second hug” TV a ndinternet commercials centered on the new Belle Maison slogan “Love. Then Ideas.” This slogan expresses ourcommitment to creating ideas that originate from love.
We are increasing the speed of the digitalization of the mail-order and online shopping business. Dramatic changes
are taking place in the business climate for this business. For example, the big increase in the volume of
information available to consumers has diversified points of contact with consumers and COVID -19 makes theoutlook for the global economy unclear. Our goal is to achieve the sustained growth of this business along withthe growth of our corporate value. To accomplish this goal, we decided that we needed an alliance with a partnerthat has resources that do not exist in our group in order to take actions incorporating methods that we have notused in the past.
Around October 2019, we started looking for an alliance partner capable of producing synergies for increasing
our e-commerce customers and contributing to sales growth and profitability in our mail-order and online
shopping business. In April 2020, we started detailed discussions with JR East concerning a capital and businessalliance. After many studies and meetings concerning an alliance, an agreement was reached to combine theresources of Senshukai and JR East. Based on mutual cooperation, the two companies will use their knowledge,
information, assets and other resources in e-commerce, membership and payment processing businesses and otheractivities. Specific activities are listed in “2. Details of the capital and business alliance (2) Business alliance.”
Senshukai and JR East agree that these activities have the potential to expand the business operations of bothcompanies. In addition, this alliance is expected to contribute to the medium and long-term advancement ofbusiness operations and growth of corporate value of both companies. The capital and business alliance agreement
includes the sale of Senshukai treasury shares to JR East.
2. Details of the capital and business alliance(1) Capital alliance
Senshukai used treasury shares to sell 5,714,200 shares (57,142 voting rights) of its common stock to JR East. As
a result, the total number of shares issued is 52,056,993 and the total number of voting rights is 458,665. Basedon these numbers, JR East holds 10.98% of all shares issued (rounded to two decimal places) and 12.46% of all
voting rights.
(2) Business alliance
Senshukai and JR East agree to establish a business alliance based on the following themes for the advancementof the businesses and growth of corporate value of both companies. Additional items concerning this alliance will
be determined by the mutual discussion of Senshukai and JR East at the Collaboration Promotion Committee tobe established following the signing of the capital and business alliance agreement.
1) The expertise and know-how of Senshukai and JR East will be used to strengthen the e-commerce businessesof both companies.
2) Senshukai and JR East will jointly develop merchandise sold on the JR East e-commerce mall (JRE Mall).
3) Increase sales and customers at Senshukai and JRE Mall by selling Senshukai merchandise and jointly
developed merchandise at JRE Mall and by using the sales channels of retail facilities operated by JR East or
a group company at or near railway stations.
4) Increase sales and customers at Senshukai and the number of members of JR East’s JRE POINT customer
loyalty program by allowing Senshukai e-commerce customers to receive and use these points and by
allowing Senshukai and JR East customers to exchange points of the two companies’ point systems.
5) Increase the number of Senshukai e-commerce customers and strengthen the JR East payment processing
business by allowing the use of the View credit card issued by the JR East Group for Senshukai e -commercepurchases and by promoting the use of this credit card to purchase Senshukai merchandise.
6) Use the expertise and know-how of Senshukai and JR East to strengthen marketing activities and create new
businesses.
3. Profile of East Japan Railway Company
(1)

Name

East Japan Railway Company(2)

Location

2-2, Yoyogi 2 cho-me, Shibuya-ku, Tokyo(3)

Representative

Yuji Fukasawa, President and CEO(4)

Business

Passenger railroad business and other activities(5)

Capital200,000 million yen

II. Sale of treasury shares through a third-party allotment
1. Sale of treasury shares(1)

Disposal date

October 12, 2020

(2)

Number of shares sold

Senshukai common stock 5,714,200 shares(3)

Disposal price350 yen per share(4)

Total proceeds

1,999,970,000 yen(5)Method of sale or allotment(Buyer of shares)

Third-party allotment with all shares allocated to JR East

Other

Each of the items above is subject to effective filling under the
Financial Instruments and Exchange Act.

(6)

2. Purpose and reason for the sale
As is explained in “I. Summary of the capital and business alliance 1. Purpose and reason for the alliance,”
Senshukai has signed the capital and business alliance agreement based on the belief that this alliance willcontribute to the medium and long-term advancement of business operations and growth of corporate value ofboth companies.
We sold treasury shares to JR East through a third-party allotment for the purpose of establishing a sound basefor accomplishing the objectives of the alliance. JR East has purchased 5,714,200 shares of Senshukai common
stock (10.98% of all shares issued) at a total cost of approximately 2 billion yen (rounded to 100 million yen).
3. Amount, use of funds to be raised and payment date(1) Amount of funds to be raised(1)

Total payment amount

1,999,970,000 yen(2)Estimated cost of issuance

163,000,000 yen(3)Estimated net proceeds

1,836,970,000 yen

Notes: 1. Estimated cost of issuance do not include consumption tax.
2. Estimated cost of issuance mainly includes advisory fees, attorney fees, and the cost of preparing
securities registration statements and other documents.
(2) Specific use of funds to be raised
The estimated net proceeds of 1,836 million yen will be used for capital expenditures needed to accomplish
the objectives of the alliance and for advertising and sales promotion expenses.
More specifically, the following expenditures are planned.
1) Expenditures for opening stores at or near railway stations, system development expenses for the Senshukai
e-commerce site in conjunction with this alliance and system upgrade expenses that will be needed for thesystem development activities: 1,038 million yen (expenditures are to be made from November 2020 to about
March 2024)
2) Advertising expenditures to promote the use of the JRE POINT program and the View credit card on the
Senshukai e-commerce site and sales promotion expenses for directing customers to the JRE MALL: 798
million yen (expenditures are to be made from March 2021 to about March 2023)
Funds will be held by Senshukai as bank deposits until needed for these expenditures.

3. Other
Important Information about Going Concern Assumption
In 2019, there was an operating profit of 772 million yen and a profit attributable to owners of parent of 8,182 million
yen. In 2017 and 2018, there was an operating loss and a loss attributable to owners of parent. These losses create
significant doubts about the going concern assumption.
To eliminate these doubts and deal with other issues, business structural reforms centered on the mail-order and online
shopping business are under way in accordance with a medium-term management plan that started in 2019 and willend in 2021.
In 2019, the first year of this plan, activities were focused on achieving the optimal size of business operations and on
operational reforms, mainly in the mail-order and online shopping business. These activities improved the gross profit
margin by reducing merchandise valuation losses that have been a structural component of business operations.
Reforms have also lowered fixed expenses. Due to these improvements, the consolidated operating profit in 2019 was
higher than our forecast.
In 2020, the second year of the plan, we are continuing to implement operational reforms. We are also strengthening
the catalog-based model for attracting customers and rebuilding the membership base. The number of customers
making purchases in the core Belle Maison business was higher than one year earlier.
We will continue to implement numerous measures to make improvements in order to build a solid base for earnings
and return to growth backed by a recovery and stability in the performance of the Senshukai Group. We will use theprovision of value based on the Belle Maison slogan “Love. Then Ideas.” that was announced in 2019 in order tocreate new ideas that reinforce our reputation among customers as a trustworthy company that is a source of innovativeand exciting products.
At the end of the third quarter of 2020, cash and deposits were 15,383 million yen. Senshukai also has a committed
credit line with the total amount of 10 billion yen with financial institutions (7 billion yen was unused at the end of
the third quarter of 2020). Consequently, we believe there are no concerns about liquidity because we have a sufficientamount of working capital.
For these reasons, we believe there are no significant uncertainties regarding the going concern assumption.
In 2020, we expect lower sales and earnings mainly because of a smaller number of weddings and receptions in thebridal business due to COVID-19. However, we believe that the performance of the bridal business will improve when
the COVID-19 crisis comes to an end. One reason is that a very large number of weddings were postponed rather thancanceled, partly because the bridal business operates mainly in regional mid-sized cities rather than major metropolitan
areas. In addition, the number of people visiting our wedding facilities has been recovering since the end of the stateof emergency and we are receiving a substantial number of orders for weddings and receptions in 2021 and afterward.
The demand for weddings and receptions is clearly remaining steady. In this business, we will continue to cut selling,
general and administrative expenses and use these expenses more efficiently and take actions in response to requests
from the Japanese government and local governments while monitoring upcoming events involving the COVID-19
crisis. Our bridal business has a culture and track record of creating services that keep us one step ahead of market
trends as well as the ability to respond quickly to shifts in the business climate. As Japan’s wedding market undergoes
a major transformation, we will reexamine our strategies for the bridal business, create new services and take othersteps to be positioned for growth after the COVID-19 crisis ends.

* This financial report is solely a translation of summary of “Kessan Tanshin” (in Jap anese, including attachments), which has
been prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience ofreaders who prefer an English translation.