Summary of Financial Results for the Third Quarter of Fiscal Year 2022
(Nine Months Ended September 30, 2022)[Japanese GAAP]
November 11, 2022

Company name: SENSHUKAI CO.,LTD.

Stock exchange: Tokyo Stock Exchange
Stock code:
8165
URL: https://www.senshukai.co.jp
Representative:
Mr. Kenji Kajiwara, President and Representative Director
Inquiries:
Mr. Tetsuya Takahashi, Director, General Manager, Corporates Headquarters
Tel: +81-6-6881-3220
Scheduled date of filing of Quarterly Report: November 14, 2022
Scheduled date of payment of dividend: Preparation of supplementary materials for quarterly financial results: None
Holding of quarterly financial results meeting: None
(All amounts are rounded down to the nearest millions of yen)

1. Consolidated Financial Results for the 3rd Quarter of 2022 (January 1, 2022 – September 30, 2022)(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%

41,840(6,316)
3Q 202253,540 (10.0)462
3Q 2021
Note: Comprehensive income (millions of yen) 3Q 2022: (8,182) (-%)

Millions of yen%-

Millions of yen%

Millions of yen%(6,130)503
3Q 2021: 880 (-%)

(8,670)479-

Net income per share

Diluted net income per share

Yen

Yen

(184.98)
3Q 2022
3Q 2021
10.36
Note: Beginning with the first quarter of 2022, Senshukai has applied Accounting Standard for Revenue Recognition ( AccountingStandards Board of Japan (ASBJ) Statement No. 29, March 31, 2020). All figures for the third quarter of 2022 incorporate
this accounting standard and comparisons with the third quarter of the previous fiscal year are omitted.

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Equity ratio

Millions of yen

Net assets per share%

Yen

42,031
24,85759.1
530.03
3Q 2022
Fiscal Year 2021
52,47633,20263.3
708.09Reference: Shareholders’ equity (millions of yen) 3Q 2022: 24,830
Fiscal Year 2021: 33,202
Note: Beginning with the first quarter of 2022, Senshukai has applied Accounting Standard for Revenue Recognition (ASBJ
Statement No. 29, March 31, 2020). All figures for the third quarter of 2022 incorporate this accounting standard.

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

Year-end

Total

Yen

Yen

Yen

Yen

Fiscal Year 2021
3.00
Fiscal Year 2022
0.00
Fiscal Year 2022 (forecasts)
Note: Revision to the most recently announced dividend forecast: None

-

4.00

7.00

0.00

0.00

3. Consolidated Outlook for Fiscal Year 2022 (January 1, 2022 – December 31, 2022)
Net sales
Millions of yen(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% Millions of yen% Millions of yen% Millions of yen%

Yen(6,900)(6,700)(9,700)(206.98)
Full Year 2022
61,000Notes: 1. Revision to the most recently announced consolidated outlook: Yes
For more information, please refer to “Notice of Extraordinary Losses (Impairment Losses) and Revisions toConsolidated Outlook” (Japanese version only) that was announced today (November 11, 2022).
2. Beginning with the first quarter of 2022, Senshukai has applied Accounting Standard for Revenue Recognition (ASBJ
Statement No. 29, March 31, 2020). The above consolidated outlook for fiscal year 2022 incorporate this accounting
standard and comparisons with the previous fiscal year are omitted.

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): Yes
Newly added: 2 (Senshukai Make Co- Inc., WellServe Co., Ltd.)
Excluded: 1 (Huit laboratories, Inc.)
Note: Please refer to “2. Quarterly Consolidated Financial Statements and Notes, (3) Notes to Quarterly Consolidated
Financial Statements (Changes in Significant Subsidiaries during the Period)” on page 8 for further information.

(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 8 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: Yes
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting-based estimates: None
4) Restatements: None
Note: Please refer to “2. Quarterly Consolidated Financial Statements and Notes, ( 3) Notes to Quarterly Consolidated
Financial Statements (Changes in Accounting Policies)” on page 8 for further information.

(4) Number of shares outstanding (common shares)
1) Number of shares outstanding at the end of the period (including treasury shares)
3Q 2022:52,056,993 sharesFiscal Year 2021:

52,056,993 sharesFiscal Year 2021:

5,167,335 shares

3Q 2021:46,293,785 shares

2) Number of treasury shares at the end of the period
3Q 2022:5,209,121 shares

3) Average number of shares outstanding during the period
3Q 2022:46,870,067 shares* 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 page3, “1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecasts andOther Forward-looking Statements.”

SENSHUKAI CO.,LTD. (8165) Financial Results for the Third Quarter of Fiscal Year 2022

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

3

2. Quarterly Consolidated Financial Statements and Notes

4(1) Quarterly Consolidated Balance Sheet

4(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
Income6

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

6

Quarterly Consolidated Statement of Comprehensive Income(For the Nine-month Period)7(3) Notes to Quarterly Consolidated Financial Statements

8(Going Concern Assumption)

8(Significant Changes in Shareholders’ Equity)8(Changes in Significant Subsidiaries during the Period)

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

8(Changes in Accounting Policies)

8(Additional Information)

9(Segment Information)

10

3. Other

12

Important Matters Regarding Going Concern Assumption, etc.

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12

SENSHUKAI CO.,LTD. (8165) Financial Results for the Third Quarter of Fiscal Year 2022

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
Beginning with the first quarter of 2022, Senshukai has applied Accounting Standard for Revenue Recognition(ASBJ Statement No. 29, March 31, 2020). As a result, the explanation of results of operations for the first ninemonths of 2022 does not show the amount of increase or decrease compared with the same period of 2021.
In the first nine months (January 1 to September 30) of 2022, while the severity of the pandemic declined andeconomic activity normalized, business confidence continued to deteriorate due to protracted geopolitical risks
including the situation in Ukraine, rising interest rates in the U.S., the depreciation of the yen, and further priceincreases accompanying soaring costs for energy and raw materials.
In this business environment, the Group's normal business activities were hampered by issues related to thereplacement of the core IT system executed in January this year. From March onwards, sales promotion measures
were resumed and sales activities expanded, but sales from Belle Maison, the Group's core mail-order and online
shopping business, fell significantly year on year, and the inclusion of sales from the bridal business up to the firstquarter of 2021, which were subsequently excluded from the scope of consolidation, a lso had an effect. As a result,net sales in the first nine months of 2022 were 41,840 million yen (compared with 53,540 million yen in the firstnine months of 2021), operating loss was 6,316 million yen (compared with a profit of 462 million yen in the firstnine months of 2021), and ordinary loss was 6,130 million yen (compared with a profit of 503 million yen in thefirst nine months of 2021). Loss attributable to owners of parent was 8,670 million yen (compared with a profit of479 million yen in the first nine months of 2021).
Furthermore, our core IT system has grown in size and complexity alongside the growth of the mail-order and online
shopping business, making it difficult to respond to various changes, while the business model of our mail-order andonline shopping business has reached a turning point and systemic flexibility become essential to the futuretransformation of the business. Accordingly, we decided to replace the core IT system with a basic, simple one whilepressing forward with preparations for reforming our business processes, and completed the replacement of the core
IT system in January 2022, as originally planned. However, we take seriously the inconvenience caused to ourcustomers and many other stakeholders from the disruption of the system replacement, and accordingly the full-time
directors, full-time auditors, general manager, and deputy general managers have offered to voluntarily return aportion of their remuneration. This offer has been accepted.
Business segment performance was as follows.
Consolidated subsidiaries Dears Brain Inc. and PLANETWORK CO., LTD., and WONDERSTAGE Co., Ltd., awholly owned subsidiary of Dears Brain and a sub-subsidiary of Senshukai, were excluded from the scope of
consolidation following the sales of all shares of Dears Brain and PLANETWORK on March 31, 2021 . As a result,
the Senshukai Group no longer operates a bridal business. Consequently, there is no longer business segment
information for the bridal business beginning with the first quarter of 2022.
(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, was 36,883 million yen in the first nine months of 2022 compared with 46,521 million yen in the firstnine months of 2021. There was an operating loss of 6,556 million yen compared with a profit of 1,153 million yen
in the first nine months of 2021.
There were problems involving the launch of the new core IT system following the completion of the replacementof the previous system in January 2022. To deal with these problems, marketing activities were suspended and thelevel of normal business activities was reduced in order to focus on handling inquiries from customers during thefirst nine months. For a recovery of sales, marketing activities resumed in March after IT system operations returned
to normal. As sales activities increased, there were other measures for a recovery of the performance of this business.
Despite these measures, more time will be needed for the number of members to return to the prior -year level. In
addition, the rising cost of living has led to a greater desire to save money, and the lingering summer heat has led toa decline in demand for seasonal products. As a result, sales of Bell Maison, the core business of this segment, were
far below sales one year earlier, resulting in lower segment sales and earnings.
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SENSHUKAI CO.,LTD. (8165) Financial Results for the Third Quarter of Fiscal Year 2022

(Corporates Business)
Consolidated sales in the corporates business, which provides products and services to corporations, were 3,483
million yen compared with 3,622 million yen in the first nine months of 2021. Operating profit was 147 million yen
compared with a profit of 289 million yen in the first nine months of 2021.
Although the use of novelties related to corporate shareholder benefits remained strong, the first nine months sales
and earnings decreased because of lower than expected utilization of outsourced logistics and call center services.
(Insurance Business)
This business provides support, mainly to Belle Maison members, for choosing the most suitable insurance policies.
Consolidated sales were 344 million yen compared with 284 million yen in the first nine months of 2021 andoperating profit was 174 million yen compared with a profit of 116 million yen in the first nine months of 2021.
(Others)
Consolidated sales in other businesses, which include the childcare support business and manufacturing and salesof cosmetics, were 1,128 million yen compared with 1,378 million yen in the first nine months of 2021. Operating
loss was 81 million yen compared with a loss of 51 million yen in the first nine months of 2021. The manufacturing
and sales of cosmetics business was excluded from the scope of consolidation following the sales of all shares ofHuit laboratories, Inc., which was a consolidated subsidiary of Senshukai, on April 1, 2022. For more information,please refer to the “Notice of Change in Consolidated Subsidiaries (Transfer of Shares)” released on March 4, 2022
(Japanese version only).
(2) Explanation of Financial Position(Balance sheet position)
Assets totaled 42,031 million yen at the end of the third quarter of 2022, a decrease of 10,444 million yen from theend of 2021.
Current assets decreased 7,140 million yen to 27,322 million yen. The factors included a decrease of 7,786 million
yen in cash and deposits. Non-current assets decreased 3,304 million yen to 14,709 million yen. The factors included
decreases of 2,468 million yen in intangible assets, 567 million yen in property, plant and equipment, and 268 million
yen in investments and other assets due to the booking of impairment losses.
Current liabilities decreased 2,756 million yen to 13,210 million yen. The factors included an increase of 889 million
yen in contract liabilities, decreases of 2,265 million yen in electronically recorded obligations-operating and 1,703
million yen in other. Non-current liabilities increased 655 million yen to 3,963 million yen. The main factors
included increases of 460 million yen in long-term borrowings and 195 million yen in other.
Net assets decreased 8,344 million yen to 24,857 million yen. The factors included booking of loss attributable toowners of parent of 8,670 million yen. As a result, the equity ratio was 59.1%.
(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements
Senshukai has revised its Consolidated Outlook for Fiscal Year 2022 (January 1, 2022 to December 31, 2022) thatwas released on May 13, 2022. For more information, please refer to “Notice of Extraordinary Losses (Impairment
Losses) and Revisions to Consolidated Outlook” (Japanese version only) that was announced today (November 11,2022).

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SENSHUKAI CO.,LTD. (8165) Financial Results for the Third Quarter of Fiscal Year 2022

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Millions of yen)
3Q 2022(As of Sep. 30, 2022)

Fiscal Year 2021
(As of Dec. 31, 2021)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade, and contract
assetsMerchandise and finished goods

15,665

7,878

2,235

2,629

9,123

9,553

Accounts receivable-other

5,654

4,550

Other

1,911

2,791

Allowance for doubtful accounts

(126)

(80)

34,46327,322

Buildings and structures, net

4,076

3,879

Land

5,524

5,402

379

130

9,980

9,413

Other

4,204

1,735

Total intangible assets

4,204

1,735

Investment securities

2,493

2,416

Other

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

Other, net
Total property, plant and equipment
Intangible assets

Investments and other assets
1,425

1,216

Allowance for doubtful accounts

(90)

(73)

Total investments and other assets

3,828

3,560

18,013

14,70952,47642,031

Total non-current assets
Total assets-4-

SENSHUKAI CO.,LTD. (8165) Financial Results for the Third Quarter of Fiscal Year 2022

(Millions of yen)
3Q 2022(As of Sep. 30, 2022)

Fiscal Year 2021
(As of Dec. 31, 2021)
Liabilities
Current liabilities
Electronically recorded obligations-operating

6,612

4,347

Accounts payable-trade

2,761

3,132

Short-term borrowings

550

620

Income taxes payable

22

16

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

-

889

6

-

258

-

Provision for bonuses

33

186

Other

5,721

4,017

Total current liabilities

15,966

13,210

3,005

3,465

6

6

Non-current liabilities
Long-term borrowings
Retirement benefit liability
Other
Total non-current liabilities
Total liabilities

296

491

3,307

3,963

19,274

17,174

Net assets
Shareholders’ equity
Share capital

100

100

Capital surplus

30,08430,084Retained earnings

7,061(1,801)

Treasury shares(2,953)(2,953)

Total shareholders’ equity

34,291

25,428267

257

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

-5-

119

585

(1,516)(1,516)38

75(1,089)

(597)

-

26

33,202

24,85752,47642,031SENSHUKAI CO.,LTD. (8165) Financial Results for the Third Quarter of Fiscal Year 2022

(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
Income(Quarterly Consolidated Statement of Income)(For the Nine-month Period)
3Q 2021(Jan. 1, 2021 – Sep. 30, 2021)(Millions of yen)
3Q 2022(Jan. 1, 2022 – Sep. 30, 2022)

Net sales

53,54041,840

Cost of sales

26,561

21,856Gross profit

26,97919,984

Selling, general and administrative expenses

26,51626,300462(6,316)

Interest and dividend income
Share of profit of entities accounted for using equity
methodGain on adjustment of account payable

26

22

17

-

60

124

Other

322

263

Total non-operating income

427

410

Interest expenses

66

34

Rental expenses on real estate
Share of loss of entities accounted for using equity
methodCommission expenses

35

50

-

5

238

106

Other

45

28

Total non-operating expenses

385

225

503

(6,130)Operating profit (loss)
Non-operating income

Non-operating expenses

Ordinary profit (loss)
Extraordinary income
Gain on sale of shares of subsidiaries and associates-

134

Subsidy income

162

187

Total extraordinary income

162

321

Extraordinary losses
Loss on sale and retirement of non-current assets
Loss on tax purpose reduction entry of non-current
assetsImpairment losses

1

13

151

172

-

2,840

Loss on sale of shares of subsidiaries and associates

11-

Loss on change in equity

110-

Total extraordinary losses

274

3,026

Profit (loss) before income taxes

392(8,835)

Income taxes

(87)

(161)

Profit (loss)

479(8,674)

Loss attributable to non-controlling interests-(4)

Profit (loss) attributable to owners of parent

479(8,670)-6-

SENSHUKAI CO.,LTD. (8165) Financial Results for the Third Quarter of Fiscal Year 2022

(Quarterly Consolidated Statement of Comprehensive Income)(For the Nine-month Period)
3Q 2021(Jan. 1, 2021 – Sep. 30, 2021)(Millions of yen)
3Q 2022(Jan. 1, 2022 – Sep. 30, 2022)

479(8,674)

Valuation difference on available-for-sale securities

48

(10)

Deferred gains or losses on hedges

177

465

Foreign currency translation adjustment
Share of other comprehensive income of entities
accounted for using equity method

(11)

9

185

27

400

492

880

(8,182)880(8,177)-(4)

Profit (loss)
Other comprehensive income

Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to non-controllinginterests-7-

SENSHUKAI CO.,LTD. (8165) Financial Results for the Third Quarter of Fiscal Year 2022

(3) Notes to Quarterly Consolidated Financial Statements(Going Concern Assumption)
Not applicable.
(Significant Changes in Shareholders’ Equity)
Not applicable.
(Changes in Significant Subsidiaries during the Period)
Senshukai Make Co- Inc. and WellServe Co., Ltd. were included in the scope of consolidation in the second quarterof 2022 due to these establishments. These companies are specified subsidiaries of Senshukai.
Huit laboratories, Inc., a consolidated subsidiary of Senshukai, was excluded from the scope of consolidation
following the sales of all shares of this company in the second quarter of 2022.
(Application of Special Accounting Methods for Presenting Quarterly Consolidated Financia l 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 i ncludes 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.
(Changes in Accounting Policies)(Application of the Accounting Standards for Revenue Recognition)
Senshukai is applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31,2020) and other standards from the beginning of the first quarter of 2022. Based on these standards, revenue
expected to be received in exchange for the provision of goods and services is recognized when the control of thegoods and services is transferred to customers.
The main changes resulting from the application of the Accounting Standard for Revenue Recognition are as
follows:(1) Revenue recognition concerning the Senshukai Point Program
In prior years, Senshukai maintained a provision for sales promotion expenses based on the expected future use ofpoints that customers receive when they buy Senshukai merchandise in order to prepare for the use of these points.
Additions to this allowance were classified as selling, general and administrative expenses. In accordan ce with the
new revenue recognition standard, these points are now classified as a performance obligation and recognition ofrevenue is deferred.
(2) Revenue recognition concerning point programs of other companies
In prior years, an amount equivalent to the value of the points of point programs operated by other companies wasclassified as selling, general and administrative expenses. In accordance with the new revenue recognition standard,
the calculation of transaction prices concerning merchandise sale performance obligations to customers now uses
the method of recognizing revenue after deducting transaction prices as the amount recovered for third parties.
(3) Revenue recognition concerning shipping expenses paid by customers
In prior years, shipping expenses received from customers were deducted from selling, general and administrative
expenses. In accordance with the new revenue recognition standard, payments from customers for shipping
expenses are now recognized as revenue because the merchandise shipping service is included in the performanceobligation involving the provision of merchandise to customers.

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SENSHUKAI CO.,LTD. (8165) Financial Results for the Third Quarter of Fiscal Year 2022

(4) Revenue recognition concerning sales of merchandise that may be returned
In prior years, for transactions of merchandise that may be returned, the value of merchandise returned bycustomers was deducted from sales when Senshukai confirmed the receipt of the merchandise. In accordance withthe provision of the new revenue recognition standard concerning variable compensation, revenue for merch andisethat is expected to be returned is not recognized when the merchandise is sold. Instead, a refund liability is now
recognized that is equivalent to the payment that was or will be received for the applicable merchandise.
For the application of the Accounting Standard for Revenue Recognition, in accordance with the transitional
measures in the proviso to Paragraph 84 of this standard, the cumulative effect of the retrospective application of
the new accounting standard, if it is applied prior to the first quarter of 2022, is added to or subtracted from retained
earnings at the beginning of the first quarter of 2022. The new standard is then applied beginning with this amountof retained earnings.
As a result, net sales increased 957 million yen and cost of sales increased 0 million yen. Operating loss increased
311 million yen, and ordinary loss and loss before income taxes increased 320 million yen each in the first ninemonths of 2022. In addition, there was a decrease of 5 million yen in retained earnings at the beginning of 2022.
Due to the application of the Accounting Standard for Revenue Recognition, “Notes and accounts receivable -trade”
that was presented in the current assets section of the consolidated balance sheet in 2021 is, from the first quarterof 2022, included in “Notes and accounts receivable-trade, and contract assets.” In addition, the amountcorresponding to contract liabilities in the revenue recognition standards, that was included in “Other” presented
in the current liabilities section in 2021 is, from the first quarter of 2022, stated as “Contract liabilities.” Inaccordance with the transitional treatment prescribed in Paragraph 89-2 of the Accounting Standard for Revenue
Recognition, no reclassification has been made to the prior year’s consolidated financi al statements to conform to
the new presentation.
(Application of the Accounting Standards for Measurement of Fair Value)
Senshukai has applied the Accounting Standard for Measurement of Fair Value (ASBJ Statement No. 30, July 4,2019) and other standards from the beginning of the first quarter of 2022, and has applied the new accounting
policies set forth by the Accounting Standard for Measurement of Fair Value, etc. prospectively in accordance withthe transitional measures prescribed in Paragraph 19 of the Accounting Standard for Measurement of Fair Valueand Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019).
There is no effect of the application of these standards on the quarterly consolidated fina ncial statements.
(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 its consolidated subsidiaries have not used the provisions of Paragraph 44 of
Implementation Guidance on Tax Effect Accounting (ASBJ Guidance No. 28, February 16, 2018) in accordancewith 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 and deferred tax liabilities are based on the tax law prior
to these amendments.
(Uncertainty of accounting estimates)
As of the end of September 2022, while the severity of the pandemic declined and economic activity normalized,
business confidence continued to deteriorate due to protracted geopolitical risks including the situation in Ukraine,
rising interest rates in the U.S., the depreciation of the yen, and further price increases accompanying soaring costs
for energy and raw materials. Senshukai assumes that these factors will have only a limited effect on accounting
estimates. However, due to problems involving the launch of the new core IT system in January 2022, marketing-9-

SENSHUKAI CO.,LTD. (8165) Financial Results for the Third Quarter of Fiscal Year 2022

activities were suspended and the level of normal business activities was reduced in order to focus on handlinginquiries from customers. Due to this situation, sales of Belle Maison in the core mail -order and online shopping
business were far below sales one year earlier, resulting in lower segment sales and earnings. Currently, marketing
activities have resumed, the volume of business activities is increasing and there are new actions for achieving asales recovery. The entire Senshukai Group is firmly committed to restoring the trust of customers and achievinga recovery in the volume of orders. Although Senshukai is using the best possible estimates based on informationthat is currently available, a change in the business climate or problems involving the new core IT system may
have an effect on the financial condition, results of operations and cash flows of the Senshukai Group.
(Segment Information)
I 3Q 2021 (Jan. 1, 2021 – Sep. 30, 2021)
1. Information related to sales and profit or loss for each reportable segment
Reportable segment
Mailorder andBridal Corporates Insurance
onlineSub-total
business business businessshopping
business

Others(Note 1)

Total

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

Net sales
Sales to customers
46,521
1,733
3,622
284
52,161
1,378
53,54053,540Inter-segment
208
5
26
239
0
239
(239)
sales or transfers
Total
46,729
1,738
3,649
284
52,401
1,378
53,780(239)
53,540
Segment profit
1,153(1,045)
289
116
513
(51)
462
0
462
(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 with the operating profit on the quarterly consolidated statement of income.

2. Information related to impairment of non-current assets, goodwill, etc. for each reportable segment
Significant changes in the amount of goodwill
In the bridal business, all shares of consolidated subsidiaries Dears Brain Inc. and PLANETWORK CO., LTD.
were sold at the end of the first quarter of 2021. As a result of the sales of these subsidiaries shares, goodwill
decreased 1,158 million yen.
3. Information related to assets for each reportable segment
Significant decrease in assets due to decrease in number of subsidiaries
Consolidated subsidiaries Dears Brain Inc. and PLANETWORK CO., LTD., and WONDERSTAGE Co., Ltd., awholly owned subsidiary of Dears Brain and a sub-subsidiary of Senshukai, were excluded from the scope of
consolidation following the sales of all shares of Dears Brain and PLANETWORK at the end of the first quarterof 2021. As a result, segment assets of the bridal business for the third quarter of 2021 decreased 14,911 million
yen, compared with the end of 2020.

- 10 -SENSHUKAI CO.,LTD. (8165) Financial Results for the Third Quarter of Fiscal Year 2022

II 3Q 2022 (Jan. 1, 2022 – Sep. 30, 2022)
1. Information related to sales and profit or loss for each reportable segment
Reportable segment
Mail-orderand online
shopping
business

Corporates
business

Insurancebusiness

Sub-total

Others(Note 1)

Total

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

Net sales
Sales to customers
36,883
3,483
344
40,712
1,128
41,84041,840Inter-segment
184
30
214
0
215
(215)
sales or transfers
Total
37,0683,513
344
40,926
1,128
42,055(215)
41,840
Segment profit(6,556)147
174(6,234)(81)(6,316)(6,316)(loss)
Notes: 1. Others represent the businesses which are not included in any of the three reportable segments and consist of thechildcare support business and manufacturing and sales of cosmetics.
2. 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(Significant impairment losses related to non-current assets)
In the mail-order and online shopping business segment, the book values of some assets were re duced to theirrecoverable amounts in view of performance being significantly lower than planned, and an impairment loss wasrecorded. This impairment loss was 2,840 million yen in the first nine months of 2022.
3. Information related to revisions for reportable segments
In 2021, consolidated subsidiaries Dears Brain Inc. and PLANETWORK CO., LTD., and WONDERSTAGE Co.,
Ltd., a wholly owned subsidiary of Dears Brain and a sub-subsidiary of Senshukai, were excluded from the scopeof consolidation following the sales of all shares of Dears Brain and PLANETWORK. As a result, the Senshukai
Group no longer operates a bridal business. Consequently, there is no longer business segment information forthe bridal business beginning with the first quarter of 2022.
(Application of the Accounting Standards for Revenue Recognition)
As described in Changes in Accounting Policies, Senshukai has applied the Accounting Standard for Revenue
Recognition (ASBJ Statement No. 29, March 31, 2020) from the beginning of the first quarter of 2022 andchanged the accounting method for revenue recognition. Accordingly, the method for calculating segment profit
or loss has been changed as well.
The effect of this change was to increase net sales by 964 million yen and to increase segment loss by 311 million
yen for the first nine months of 2022 in the mail-order and online shopping business. Net sales decreased 6
million yen and there was no effect on the segment profit in other businesses.

- 11 -SENSHUKAI CO.,LTD. (8165) Financial Results for the Third Quarter of Fiscal Year 2022

3. Other(Important Matters Regarding Going Concern Assumption, etc.)
The Senshukai Group recorded an operating profit, ordinary profit and profit attributable to owners of parent in 2021.
However, sales in the first half of 2022 were far below 2021 first half sales mainly because of problems involving thelaunch of the new core IT system in January 2022 and the removal from consolidation of subsidiaries that operate thebridal business. Furthermore, there was a large operating loss, ordinary loss and loss attributa ble to owners of parent
in the first half of 2022.
In the third quarter of 2022, there was still no significant recovery in results of operations as sales continued to belower than one year earlier. In addition, there was an impairment loss of 2,840 mill ion yen in the third quarter basedon the result of a comprehensive examination of the ability to recover these assets in the future based on accounting
standards for the impairment of non-current assets. As a result, there were large losses in the first nine months of 2022:
an operating loss of 6,316 million yen, ordinary loss of 6,130 million yen and loss attributable to owners of parent of
8,670 million yen.
Due to the continuing decline in sales even after the resolution of problems involving the new c ore IT system and to
the large operating loss, there are currently significant doubts about the going concern assumption. The Senshukai
Group is taking the following actions in order to end the current problems and improve results of operations.
(Measures to improve results of operations)
The Senshukai Group is taking actions aimed at maintaining the stability of the core IT system and regaining the trustof customers. In addition, group companies will continue to focus on numerous measures for increasing sales andearnings. To become profitable in 2023, the main objective is the transformation of the group’s business model byplacing priority on goals of the medium-term business plan, including the digital shift of the mail order and online
shopping business, profit structure reforms, and co-creation with partner companies.
Progress report(1) Digital shift of the mail-order and online shopping businessThis business is currently reexamining promotions centered on catalogs and shifting resources to digit al promotional
activities using social networking services (SNS) and other digital channels. Activities involving this shift include thecreation of banners based on click funnels for major products, the creation of landing pages (a web page where avisitor “lands” after clicking a link in an ad), the provision of more information about merchandise, increasing thenumber of sessions for specific products, and raising the sales conversion rate. There has been steady progress in allof these areas and we plan to expand these activities to encompass even more products.
Preparations are under way for a very large cross-media marketing campaign with links between TV commercials and
SNS that is to begin in the middle of November 2022. Based on the results of this campaign, we plan to make more
improvements to these activities and continue these linked TV commercial-SNS marketing activities in 2023.
(2) Profit structure reforms
In the past, Senshukai’s operations were structured mainly for the catalog business. This emphasis on catalogs will be
ended in order to narrow our focus dramatically to primarily original merchandise that is ideally suited for digitalsales channels and is highly competitive in open markets. The goals are to improve our gross pr ofit margin and boost
our efficiency concerning merchandise development, inventory management and other aspects of business operations.
We will use sales promotion expenses more effectively by cutting back catalog distribution to customers who do notuse catalogs for shopping and shift to more effective digital promotions. Going forward, we plan to maximize returnon investment by directing investment to raising the retention rate and purchasing frequency of existing members, inaddition to approaching potential new customers.
We will continue to use catalogs as a major tool for promotions and communication with customers who support thissales channel and will further upgrade the quality of the new ideas and other innovations in our catalogs.
In addition, we plan to expand the advertising solutions business as the digital shift takes place in the mail -order andonline shopping business. We will develop a new advertising menu and conduct trial sales that utilize Bell Maison- 12 -SENSHUKAI CO.,LTD. (8165) Financial Results for the Third Quarter of Fiscal Year 2022

Net, an e-commerce website that ranks among the largest in Japan in terms of the number of female members. Our
objective is to use growth of sales and earnings in the highly profitable advertising solutions business to raise theprofitability of the entire Senshukai Group.
(3) Co-creation with partner companies
We are strengthening and expanding our collaboration with East Japan Railway Company (JR East). One activity data
marketing support based on the ability to contact JRE Point members for the purpose of increasing activity on JRE
MALL. Another is performing tasks outsourced by the JR East Group. Activities involving JR East Group are adding
to the Senshukai Group operations other than mail-order and online shopping and the operation of physical stores.
Expansion of co-creation activities utilizing the assets of Senshukai and JR East will continue.
Raising the value of the Belle Maison brand and strengthening the Belle Maison membership base are also major
goals. One way is by providing services involving the use and disposal of merchandise, such as the “kimawari” usedmerchandise purchasing service that was started through co-creation with Aucnet, Inc., a provider of informationbased distribution services. Increasing the number of convenient services closely tied to customers’ lives is anotherway we plan to accomplish these goals. The trial operation of “kimawari” demonstrated that the percentage of“kimawari” customers who continue to use Belle Maison to buy merchandise is dramatically higher than for other
Belle Maison customers. The November grand opening of “kimawari” was very successful. We plan to enlarge
merchandise handled by “kimawari” and speed up other measures in order to use this new service as an importantmeasure for improving the profitability of Belle Maison.
Senshukai’s financial position was sound as of the end of the third quarter of 2022 with an equity ratio of 59.1%.
Furthermore, cash and deposits totaled 7,878 million yen and there is a 2,500 million yen overdraft facility. As a result,
there are no concerns about liquidity.
There is a committed credit facility of 10 billion yen with several financial institutions that include a number offinancial covenants. At the end of 2022, Senshukai may violate one of these covenants concerning the level of net
assets. However, there were no loans using this credit facility at the end of the third quarter of 2022 and land, buildings
and other assets have been submitted as collateral for the entire 10 billion yen of this credit facility. Some of theseassets have also been used as collateral for long-term borrowings from these financial institutions that amounted to3,100 million yen at the end of the third quarter of 2022. We plan to hold discussions with financial institutions about
revising the terms of the credit facility and take other actions in order to continue receiving the support of thesefinancial institutions.
For these reasons, we believe that there are no significant uncertainties about the going concern assumption.
The outlook for the business climate for the Senshukai Group remains uncertain because of shifts in consumer
behavior caused by the pandemic, geopolitical risk involving the Ukraine crisis and other events, the yen’s rapid
depreciation, and other reasons. We plan to return to profitability in 2023 by co ntinuing to adapt with flexibility tochanges in the business climate and taking actions that are needed in a timely manner. From a longer perspective, ourgoal is to become an organization that can earn the support of customers for many years and meet the expectations of
all stakeholders.

* This financial report is solely a translation of summary of “Kessan Tanshin” (in Japanese, 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.

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