Senshukai Co., Ltd.
Interim Fiscal 2008 Earnings Presentation

August 1, 2008

Copyright SENSHUKAI Co.,Ltd. All Rights Reserved.

Contents

1. Results of Operations for Interim Fiscal 2008
2. Results Compared to Initial Targets for Interim Fiscal 2008
3. Highlights of Interim Fiscal 2008
4. Progress on the Medium-Term Management Plan
5. Consolidated Operating Forecasts for Fiscal 2008
6. Others

22

Results of Operations for Interim Fiscal 200833

Consolidated Results of Operations for Interim Fiscal 2008 (YoY Comparison)(Millions of yen)Interim Fiscal2007

Interim Fiscal2008

Comparison
to Net Sales

Comparison
to Net SalesDifference

YoY
Change %79,701-79,211--490-0.6%

Cost of Sales

40,98751.4%

40,93651.7%-51-0.1%

Gross Profit

38,71448.6%

38,274

48.3%

-440

-1.1%

SG&AExpenses

35,21844.2%

36,914

46.6%

1,696

4.8%

Operating Income

3,495

4.4%

1,359

1.7%

-2,136-61.1%

Ordinary Income

3,917

4.9%

816

1.0%

-3,101-79.2%Net Income

2,001

2.5%

196

0.2%

-1,805-90.2%

Net Sales

44Operating Profit Ratio for Interim Fiscal 2008 (YoY Comparison)
Cost of Sales-0.3%

Catalog Expenses-1.0%
Labor Costs-0.4%

Other SG&AExpenses
-1.0%

4.4%

1.7%

Interim Fiscal 2007

Interim Fiscal 2008

Although the increase in the cost-of-sales ratio was limited, the increase in ratio of sales to SG&A expenses
such as catalog expenses brought a 2.7% decrease in the operating profit ratio.

55

Trends in the Sales for the First Half (YoY Comparison) (Monthly and YTD)
Consolidated
ConsolidatedSales
Sales(monthly)(monthly)(Millions of yen)

2007年

Interim Fiscal2007

Consolidated
ConsolidatedSales
Sales(YTD)
(YTD)

2008年

+2.1% -1.6%16,000

2007年

Interim Fiscal
2008年
2008

90,000

+2.6%
-1.0%

14,000Interim Fiscal
2007(Millions of yen)Interim Fiscal
2008

-0.6%

80,000

-9.6%

-1.2%

+2.6%

70,00012,000-1.1%

60,00010,00050,000

-2.3%

8,000

40,000
6,000

-5.1%

30,0004,000

20,000 -9.6%

2,000

10,00000January February March

１月

２月

３月

April

４月

May

５月

June

January February

６月

１月

２月

March

３月

April

４月

May

５月

June

６月

Sales of spring/summer items suffered in January and February due to severe cold but recovered to acertain extent from March and April due to warm weather. However, the growth was not sufficient,and sales registered year-on-year losses.
66

Net Sales by Business Segment for Interim Fiscal 2008 (YoY Comparison)Interim2007年度Fiscal 2007

-490(-0.6%)

Interim2008年度Fiscal 2008

79,701 79,211+150(+0.2%)(Millions of yen)

80,00067,410 67,560
70,00060,00050,00040,00030,00020,00010,0000-514(-7.6%)-126(-2.3%)

6,762 6,247

5,528 5,402

HanpukaiBusiness
頒布会事業

Catalog Business
カタログ事業

OtherBusinesses
その他事業

Consolidated
全社連結77Current Situation of Catalog BusinessNumber of Active Customers*

Average Sales Per Customer

Number of New Members*Number of customers placing orders over the year
(10,000 members)(10,000 members)

(Yen)
-329

+13388+3.5

13,31812,98943.0Interim Fiscal
2008年度中間期
2008

Interim Fiscal
2007年度中間期

375Interim Fiscal
2007年度中間期
2007

Interim Fiscal
2008年度中間期
2008

Interim Fiscal
2007年度中間期
2007

2007

46.5

Interim Fiscal
2008年度中間期
2008* Increase in number of newly acquired customers as well as that of active customers* Fashion catalog remained unchanged. Decrease in living catalog from the previous year (decrease ininterior goods and fabric). Increase in bargain sales. Strong sales of child and gift.

88Current Situation of Hanpukai Business
Number of Members(10,000 members)●The trend of declining members iscontinuing. Rebuilding theHanpukai Business is progressing
through the office vending box
business; about 17,000 boxes were
installed in offices in June.

60.0
53.9

50.0

-7.6

46.3

19.0
40.0

16.1

Individual members

30.2Group members

30.0

20.0

34.9

10.0

0.0
Interim Fiscal 20072007年度中間期

Interim Fiscal 20082008年度中間期
99

Current Situation of Other Businesses(Millions of yen)

6,000

-126

5,528

5,402

その他,
Other
27.3%
27.3%

5,000

4,000

法人
B-to-B
Operations

法人
B-to-B
Operations
Contracting
業務受託,services
58.3%
58.3%

3,000

2,000

Storefront
店舗businessPetペット
business

Sampling
サンプリング,
14.4%
14.4%

Storefront
店舗businessPetペット
business

1,000
Other

その他

Other

その他

* Decrease in sales of contracting services, part of Bto-B operations.
* Increase in sales of pet business.

0Interim Fiscal 20072007年度中間期

InterimFiscal 20082008年度中間期
1010

Cost-of-Sales Ratio Overview+0.5P
Hanpukai Business

Consolidated

51.4%+0.3P46.4%

45.9%

51.7%

-0.2P

Catalog Business
51.6%

Other Businesses
Interim Fiscal 20072007年度中間期

Interim Fiscal 20082008年度中間期

51.4%

+5.4P

61.0%

55.6%

z Hanpukai Business: Increased cost rate due to increase in numberof office vending boxes
z Catalog Business: Decreased cost of purchase and decreased
evaluation lossz Other Businesses: Increased cost rate due to B-to-B operations

InterimFiscal 20072007年度中間期

Interim Fiscal 20082008年度中間期

1111

Breakdown of Changes in SG&A Expenses(Millions of yen)

40,000+1,696

35,218

Ratio of sales to SG&A expenses increased.
(44.2%⇒46.6%)

36,91435,000(Millions of yen)

30,000Catalog-related expenses
Leasing expenses
Depreciation expenses
Commissions paid
Other increased expenses

25,00020,000

715
217
145
144
475
1,696

15,000*10,000*5,0000**Interim Fiscal 2007 2008年度中間期
Interim Fiscal 20082007年度中間期

Increase in catalog costs due to increased
paper cost
Increase in rent for Tokyo headquarters andstores
Increase in depreciation due to new Bellne
systemIncrease in affiliate commision and royalties1212

Results Compared to Initial Targets for Interim Fiscal 20081313

Results Compared to Initial Targets for Interim Fiscal 2008
(Millions of yen)Interim Fiscal
2008 InitialTargets

Comparison
to Net Sales

Interim Fiscal Comparison Difference2008 Results to Net Sales

81,500-79,211-

Cost of Sales

41,71851.2%

40,936Gross Profit

39,781

48.8%

SG&A
Expenses

37,681

OperatingIncome
Ordinary Income

Net Sales

Net Income

Progress
Indicator%-2,289

-2.8%

51.7%

-782

-1.9%

38,27448.3%-1,507

-3.8%

46.2%

36,914

46.6%

-767

-2.0%

2,100

2.6%

1,359

1.7%

-741

-35.3%

2,100

2.6%

816

1.0%-1,284-61.1%

900

1.1%

196

0.2%

-704

-78.2%

1414

Breakdown of Changes in Cost-of-sales Ratio and SG&A Expenses(Comparison to initial budget)

Cost-of sales Ratio○ Increase in cost-of-sales ratio in line with increased bargain sales and web- and fax-based
bargain sales

SG&A Expenses○ Ratio of sales to SG&A expenses 46.2% ⇒ 46.6%-767(Millions of yen)

37,68140,00036,914(Millions of yen)

35,000Catalog-related expenses
Labor costs
Leasing expenses
Commissions paid
Other decreased expenses

30,00025,00020,000
15,000-412-205
94107-351-767

10,0005,0000 2008年度当初予算
Interim Fiscal 2008

* Catalog mailing cost, decrease in unit priceas well as circulation

Interim Fiscal 20082008年度中間期実績

Initial Targets

1515

Highlights of Interim Fiscal 20081616

Highlights From Interim Fiscal 2008
1. Opening of Kurasu Fuku stores in Mikage Classe andArio Otori
New stores opened in Kobe and Osaka in March.
Three stores in total.
We will gradually increase the number of stores.

2. Introducing Benebis at Hanshin Department
Store
Our original shoes brand, Benebis, was sold fora limited time at Hanshin Department Store.

3. Making Dears Brain Inc. our subsidiary
We made Dears Brain Inc. our subsidiary. DearsBrain Inc. opens stores focusing on local regions andsucceeded in producing strong results by managing
the mansion-type wedding business.
We seek further development in the years ahead.
Fiscal 2007
Actual Sales: 5.1 billion yen Operating Profit: 0.1 billion yen
Forecasts for Fiscal 2010 Sales:
10 billion yen Operating Profit: 1 billion yen

1717

Progress on the Medium-Term Management Plan(2008-2010)1818

Promotion of Channel Mix (Internet Sales, Number of Stores and Sales)InternetInternetSales
Sales(Millions of yen)

NumberNumberofofStores
StoresandandSales
Sales
Internet only
純ネット売上80,0004,000

33,30733,756

40

27

3,000
2,500

32,94828

14,95620,00032,947

10,00016,73917,9920

2007年度上期実績
Interim Fiscal

Interim Fiscal
2008年度上期実績

2007 results

2008 results

4,300

2,500
1,000

Fiscal 20082008年度目標
targets0* Via catalog: Customer reads a catalog then purchases byInternet, entering catalog number* Internet only: Customer makes purchase by putting product into
online shopping cart

102,000
1,100

500
results

20

1,500

38,200Fiscal 20072007年度年間実績

3024

2,000

17,01750

3,500

35,80050,00030,000(Number of stores)

4,500

66,25460,00040,000

Number of stores
店舗数

48

5,000

74,00070,000Store sales
店舗売上(Millions of yen)Via catalog
カタログ経由Fiscal2007年度実績
2007 results

Interim Fiscal
2008 results

2008年度上期実績

Fiscal 20082008年度計画
plan targets

Fiscal2010
2010年度目標
targets

0* Plan to open new Kurasu Fuku stores during the year
* Plan to open outlet stores in the Belle Maison market

1919

Expansion of Customer Base
1. To acquire new customers in their twenties

2. To acquire new customers in their fifties

Renewed website opening on August 4th→Special site for each product category
Expansion of sizing and taste for
StyleNote and Rashisa

Opening of new website, Bellissi, forwomen in their twenties
Strengthening of Okaimono with

Expansion of advertising flyer ofKurasu Fuku

Aim to newly acquire
540,000 customers intheir twenties

Active customers of Belle Maison
Aim to newly acquire
330,000 customers intheir fifties

2030

405060 (Age)2020

Reduction in cost-ofsales ratio

Reduction in distributionrelated variable cost

SCM Promotion (Status of Each Indicator)

Degree ofImprovement

Interim Fiscal 2007
Results

Interim Fiscal 2008
Results

Fiscal 2008
Medium-Term
Management PlanTargets

Rapid delivery ratio

83.9%

77.7%

83.8%

Delivery-to-order ratio

132.2%

145.7%

131.0%

Import ratio

71.1%

71.3%

72.0%

Domestic directtransaction ratio

19.1%

21.4%

22.0%

Inventory turnover

4.3 times

3.9 times

4.1 times

Inventories (catalogproducts)

15.484 billion yen

14.673 billion yen

15.7 billion yen* Rapid delivery ratio: The ratio of products in stock that are available for immediate delivery.
* Delivery-to-order ratio = number of deliveries / number of orders.
* Direct transaction: Our own SPA transactions that are not via trading companies.
○ The rapid delivery ratio and the delivery-to-order ratio have worsened due to the current period’s target of inventory
reduction. Other factors include out of stock due to strong sales of the summer catalog of Kurasu Fuku. We plan to
improve the situation by reviewing the method of ordering starting from the second half.
○ The import ratio and the direct transaction ratio continue its trend of small increase.
○ Reduction of the inventory value is going well on the year-to-year basis (monthly basis). We plan to improve theinventory turnover by bargain sales conducted immediately after the expiration of catalogs.
2121

Consolidated Operating Forecasts for Fiscal 2008

2222

Consolidated Earnings Forecasts for fiscal 2008 (YoY Comparison)(Millions of yen)
Fiscal 2007

Comparison
to Net Sales

Fiscal 2008
Comparison to Difference
Consolidated
Net Sales
Forecast

YoY
Change %156,792-

160,000-

3,208

2.0%

Cost of Sales

80,864

51.6%

82,264

51.4%

1,400

1.7%

Gross Profit

75,92848.4%

77,735

48.6%1,807

2.4%

SG&A
Expenses

70,63745.0%

74,735

46.7%

4,098

5.8%

Operating Income

5,291

3.4%

3,000

1.9%

-2,291-43.3%

Ordinary Income

5,626

3.6%

2,600

1.6%

-3,026-53.8%Net Income

2,494

1.6%

900

0.6%

-1,594-63.9%Net Sales2323

Prioritized Activities For Second Half 2008
¾ Improvement of cost-of-sales ratio
We reviewed the pricing policy of some products in the summer
catalog, and for the autumn/winter catalog. We implemented a fullfledged price revision and inventory reduction.

¾ Reduction of number of mailed catalogs and printed copies
We reduced the number of mailed catalogs by 500,000 by reviewing
the mailing condition. We aim to improve efficiency of catalog costsby reducing the number of catalogs by 2 million copies.

-0.2 point-540 million yen¾ Renewal of Belle Maison Net (From August 4th)
We opened special sites for each product category such as
fashion, interior goods, beauty goods, gourmet meal/sweets
and maternity/baby/child. We aim to provide a place
where customers can enjoy shopping and to strengthen
SEO.
With the above measures, we aim to strengthen thecustomer link with catalogs.

2424

Projected Net Sales by Business Segment for Fiscal 2008 (YoY Comparison)
2007年度Fiscal 20072008年度予想
Fiscal 2008 Forecast(Millions of yen)

+3,208(+2.0%)+1,368(+1.0%)

156,792

160,000

160,000
132,018 133,386

140,000
120,000
100,000
80,00060,000-1,223(-9.0%)+3,073(+27.6%)40,00020,000011,128 14,201

13,645 12,412

HanpukaiBusiness
頒布会事業

CatalogBusiness
カタログ事業

OtherBusinesses
その他事業

Consolidated
全社連結* We made Dears Brain Inc. our subsidiary in the second half and included its sales in Other Businesses.
(Approximately 2.5 billion yen)25

25

Others

26

26

Dividend and Date of Earnings Announcement
Senshukai will pay an interim dividend of ¥8 per share toensure a projected 30% dividend payout ratio for fiscal 2008.
Based on the same dividend policy, the projected year-end
dividend is ¥9 per share, which would make the total
dividends for the year ¥17 per share.

Date of earnings announcements for fiscal 2008
 Third quarter of fiscal 2008

October 24 (Friday) Fiscal 2008

January 29, 2009 (Thursday) Earnings presentation

January 30, 2009 (Friday)

27

27

The forward-looking statements contained in this earnings
presentation are based on information that was available at the time.
These forward-looking statements are subject to factors such asassumptions and risks that are known to exist or that may occur inthe future. Any of these factors that are subject to change, or otherrisk factors could cause the actual results and operating performance
to be significantly different to the forecasts presented here.

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