Senshukai Co., Ltd.
Fiscal 2011 Earnings Presentation
February 9, 2012

Copyright SENSHUKAI Co.,Ltd. All Rights Reserved.

Overview of Fiscal 2011 Consolidated Results
Sales declined year-over-year in some months due to the impact of the Great East Japan
Earthquake and unfavorable weather, but sales over the full fiscal year rose slightly due to thecapture of new members through TV commercials and other cross-media promotions, growing
Internet sales, and stronger product development. Operating income and ordinary income wereroughly in line with year-ago levels. Net income declined mainly due to an increase in valuation
losses on investment securities.
Net assets increased due to an increase in retained earnings and an improvement in deferredlosses on hedges.
Progress in first fiscal year of growth strategy of Medium-Term Management Plan
1. Create “New Belle Maison”
Broaden recognition of Belle Maison brand through TV commercials and other cross-media
promotions
Bolster merchandising through development of strategic products in each category
2. Strengthen the Internet business
Make Bell Maison Net smartphone compatible, increase use of videos, and open new
websites via subsidiary Mobakore Co., Ltd to expand sales
3. Expand the bridal businessS
Saw
contribution
t ib ti fromf
opening
i off 13th bbridalid l ffacility,
ilit iin Chiba,
Chib andd salesl expanded
d d fromfanincrease in weddings and higher average sales per wedding
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2

Senshukai's Response to the Great East Japan Earthquake
Donations
Senshukai’s donations:¥30mn Donations from employees of the Senshukai Group: ¥11.43mn
Belle Maison’s collections:¥25.19mn (end-Dec) (donations of ¥500 and Belle Maison points from customers)
Smile Supporter’s collections (earthquake edition):¥6.78mn (end-Dec) (¥10 from customers + ¥10 from Senshukai)

Delivery of disaster relief goods
Delivered approximately 200,000 items to city offices throughout Miyagi Prefecture, and to Counter-Disaster
Headquarters in Fukushima and Hyogo Prefectures

Earthquake charity concert
Aprilil 30 “PlayA“Pl tot PrayP
Ch
Charity
it C
Concert”t” (d(donatedt d ¥180¥180,000)
000)
December 17 “GREEN MIND from Fukushima (Motohiro Hata)” (donated ¥7.23mn)

Gambare Tohoku! Special website for rediscovering unique goods “Iimono” from Tohoku
June 14 Website opened
p3% of sales donatedParticipated in "Mottainai Flea Market Sendai" corporate charity sale
Donated sales of approximately ¥430,000 from 1,564 items to Miyagi Prefecture's Counter-Disaster Headquarters"Kizuna" wedding
Subsidiary Dears Brain Inc., in collaboration with the non-profit organization "Shared Smile," provided free
weddings and receptions to 12 couples impacted by the earthquake disasterCooperated with FamilyMart Co., Ltd which opened a convenience store within a temporary
housingg site in Kawamatamachi,, Fukushima Prefecture on June 26
Sold Senshukai products and distributed catalogs and coupons
From disaster relief to reconstruction support: Senshukai plans to continue its support activities for disaster areas
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3

Senshukai’s Corporate Vision

Woman
Smile
Company
Smiles are the creator of happinesshappiness.
A smile on one face, and then another,is a promise of a brighter tomorrow.
Senshukai is a company
that delivers smiles to women’s daily lives,and by doing so, makes the world happy.

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4

Contents

1. Results of Consolidated Operations for Fiscal 2011
2. Overview by Segment
3 Consolidated3.
C
lid d Earnings
E i
Plan
Pl forf FiscalFi l 2012

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51. Results of Consolidated Operations for
Fi l 2011
FiscalCopyright SENSHUKAI Co.,Ltd. All Rights Reserved.

6

Consolidated Results of Operations for Fiscal 2011 (YoY Comparison)((Millions of yen)y )Fiscal 2010

Fiscal 2011

% to netsales

YoY change% to net
sales

137,261

Difference

Percentage
points

Net sales

136,859

402

Cost of sales

69,44750.7%

71,311

52.0%

1,864

1.3%

Gross profit

67,412

49.3%

65,95048.0%-1,462-1.3%

SG&A expenses

63,98946.8%

62,84245.8%-1,147-1.0%

Operating income

3,422

2.5%

3,107

2.3%

-315

-0.2%

Ordinary income

3,167

2.3%

3,233

2.4%

66

0.1%

Net income

2,037

1.5%

1,583

1.2%

-454

-0.3%

Net income per share
(yen)

47.04

36.56

-10.48Return on equity

5.3%

3.9%

-1.4%
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Trend in Sales and Profits
Consolidated Net Sales andGross Profit Margin(100 millions of yen)

1,567 1,582

Net sales
Gross profit margin

1,472

1,368 1,372

48.4% 48.3% 46.4% 49.3% 48.0%

Operating Income andOperating Margin Trends(100 millions of yen)

52 9
52.9

Operatingpg income
Operating margin

3.4%

34.2
24.1

31.0

2.5% 2.3%

1.5%

-1.6%

-24.0
Fiscal 2007 Fiscal 2008 Fiscal 2009 Fiscal 2010 Fiscal 2011

Fiscal 2007 Fiscal 2008 Fiscal 2009 Fiscal 2010 Fiscal 2011

Net sales have begun to recover, but operating income declined
due to rise in cost-of-sales ratio
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Consolidated Balance Sheet for Fiscal 2011 (YoY Comparison)
AssetsDec. 31
Dec
31,
2010

Dec. 31
Dec
31,
2011

Difference

Remarks((Millions of yen)y )Merchandise and finished goods increased due tohigher inventories.
Cash and deposits decreased.
Investment securities decreased due to sales andimpairment loss, etc.

Current assets

42,65644,482

1,826

NNoncurrent
t assetst

47 43047,43045 95945,959-1,471
1 471

Total assets
Liabilities

90,08690,441355

Current liabilities

41,31841,244-74

Noncurrent liabilities

9,356

7,753

-1,603

Total liabilities

50,67548,997-1,678

Shareholders’ equity

49,96650,910944

Retained earnings increased due to booking of net
income.

Total accumulated othercomprehensive income-10,555-9,465

1,090

Deferred losses on hedges decreased due to a fallin balance of forward exchange contracts

Total net assets

39,411

41,444

2,033

90,08690,441355

Trade payables increased due to higher inventories.
Forward exchange contracts decreased due to a fallin balance.
Bonds payable decreased due to redemption.
Long-term loans payable decreased due torepayments.

Net assets

Total liabilities
and net assets

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Consolidated Statements of Cash Flows for Fiscal 2011 (YoY Comparison)(Milli(Millions
off yen))Fiscal 2010

Fiscal 2011

Difference

Net cash provided by (used in)operating activities

9,585

448

-9,137

Net cash provided by (used in)investing activities-1 094-1,094-2 077-2,077-983

Net cash provided by (used in)financing activities-6,417-1,727

4,690

Cash and cash equivalents at endof period

10,8557,500-3,355

Operating CF: Quick collection of accounts receivable due to shorter grace periods in Fiscal 2010
Increase of inventories in Fiscal 2011
Investing CF: Aggressive investment in IT systems
Financing CF: Repayment of long
long-term
term loans payable and an increase in short
short-term
term loans payable

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10Trend in Monthly Sales for Fiscal 2011 (YoY Comparison)
Consolidated Monthly Net Sales
112.2%
106 8%
106.8%
104.1%
102.6%

103.6%

102.7%

100.0%

YoY

100%
99.0%

98.3%

97.1%

90.7%
85.4%
Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Sales in March declined due to the impact of the earthquake, trended firm until Septemberwhenh salesl droppeddd due
d to theh impacti
off theh heathwave andd typhoons,handd generally
ll roseyear-over-year from October due to the sharp drop in temperatures.
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Consolidated Sales by Product Category for Fiscal 2011 (YoY Comparison)
105.5%
51,797(Millions of yen)

54,648

Fiscal 2010

Fiscal 2011107.3%
101.7%

27,501

29,509

96 3%
96.3%

83 5%
83.5%

19,426 18,706
13,78114,010

84.5%

18,974

15,8395,378 4,547

ApparelFashionaccessories

Interior
goods

Household
goods

Foods

OthersApparel: strong sales of maternity wear, baby clothes, underwear, and men's wear
Interior goods: strong sales of fabrics and bedding
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Net Sales by Consolidated Business Segment for Fiscal 2011 (YoY Comparison)
104.3%(Millions of yen)

112,879

Fiscal 2010

108 187
108,187

Fiscal 2011

91.7%
10,983

10,067103.2%
54.4%
8,149 8,407

7,651
4,159

92.6%
1,888 1,748

Mail-orderbusiness(catalogs +Internet)

Hanpukaibusiness

Bridalbusiness

Corporates
business

Otherbusinesses

Mail-order business sales rose driven byy highergInternet sales. Bridal business sales rose,,
despite an impact from the earthquake, due to the opening of the Chiba facility. Sales in
the Corporates business declined due to end of a contract with a major client.
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Overview of Consolidated Cost-of-sales Ratio and SG&A Expenses(YoY Comparison)
Consolidated Cost-of-sales Ratio+1.3%

Consolidated SG&A Expenses-1,147

50 7%
50.7%

52 0%
52.0%

63,989,Fiscal 2010

Fiscal 2011

Fiscal 2010

Procurement costs increased due to asurge in raw materials costs and higher
labor costs in China
Bargain sales and inventory clearance
sales increased
Valuation losses increased due to anincrease in inventory(Millions of yen)
62 842
62,842

Fiscal 2011

Sales expenses:
Catalog costs declined ¥1.46bn due to media
reorganization and consolidation(catalog circulation -6.75 million copies)
Sales ppromotion expensespincreased due to crossmedia promotions
General and administrative expenses:
overall reduction

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2 Overview by Segment
2.

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Overview of Mail-order Business (Catalogs + Internet)(YoY Comparison)
Fiscal 2010
Annual number of active
customers (10(10,000
000 members)
Average sales per customer(Yen)

Fiscal 2011

Difference

366.1

375.6

9.5

11,27010,985

-285

2.9

2.9

0

7,681

7,006

-675

67 4
67.4

74 2
74.2

68
6.8

Average sales per product (Yen)

2,831

2,738

-93

Annuall orderd amount (Yen)()

33 082
33,08232 00632,006-1,076
1 076

Annual order frequency (Times)
Catalog circulation(10,000 volume)
Number of new members(10,000 members)

Annual members and new members increased thanks to marketing measures including
cross-media
di promotionsti
andd freefshipping
hi i campaigns,
ibut
b t average orderd salesl percustomer declined
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Internet-related Indicators and Policies in Fiscal 2011
Internet Salesl(including mobile sales)(100 millions of yen)

726
623

Sales via
catalog

663

290

671

260

653

179

(Fiscal years) 2007

2008

411

✤ Opened "Belle Maison Video Shopping""App for searching Belle Maison Net ordernumbers""App for distribution of sale information"- As a result, the ratio of orders fromsmartphones
his increasing

547
373

October 2011
✤ Began distributing apps for smartphones

217

313

Internet-onlyInternet
only
310
sales

Internet-only sales increased ¥11.1bn YoY

Ratio of Internet-based orders

Rising436
58.8% 64.8%
48.3% 50.0% 53.0%

2009

2010

2011

2007

2008

2009

2010

2011

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Overview of the Hanpukai Business (YoY Comparison)
Fiscal 2010

Fiscal 2011

Difference

Number of groups(10,000 groups)
Number of group members(10,000 members)

6.9

6.2

-0.7

21.2

18.7

-2.5

Average sales per group (Yen)

5,585

5,867

282

Number of individual members(10,000 members)
Average sales per individual(Yen)
T t l HanpukaiTotalHk i membersb(10,000 members)

11.8

13.4

1.6

3,105

3,099

-6

33.0

32.1

-0.9

✤ New hitproductsp

No.1
Pelvis tightening shorts

Sales 140,000 units

D
Despiteit ddeclineli in
i numberbof group members,
average sales per grouprose
Despite decline in averagesales per individual,
number of individual
members increased

No.3
Wireless beauty bra

No.2
Little library

134,000 units

85,000 units

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Overview of Bridal Business (YoY Comparison)

Fiscal 2010

Fiscal 2011

Difference

8,149

8,407

258

12

13

1

Weddings (Couples)

2,036

2,105

69

Averageg sales per
p weddingg(10,000 yen)

391 1
391.1

395 6
395.6

45
4.5

Net sales (Millions of yen)
Guesthouses

Net sales were impacted by the earthquake, but recovered faster than we had expected.
Sales increased year-over-year due to an increase in average sales per wedding and acontribution from the opening of the Chiba facility.
Number of weddings and average sales per wedding increased year-over-year.
year over year.
Average sales per wedding exceeded ¥4mn at some facilities.
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Overview of Corporates Business (YoY Comparison)(Millions of yen)

Breakdown of sales

Fiscal 2010

Fiscal 2011

Difference

5,992

2,933

-3,059Sampling

723

777

54

Novelties

320

355

35

Others

614

92

-522
522

Total

7,651

4,159

-3,492Contracting services

Contracting services: decreased due to end of contract with major outsourcing client
Others: Gift catalog “MUSUBI”
MUSUBI were transferred to the mail-ordermail order business

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3 Consolidated Earnings Plan for Fiscal 2012
3.

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Consolidated Earnings Plan for Fiscal 2012 (YoY Comparison)(Milli(Millions
off yen))Fiscal 2011

Fiscal 2012

% to netsales

YoY change% to net
sales

148,000

Difference

Percentage
points

Net sales

137,261

10,739

Cost of sales

71,31152.0%

76,466

51.7%

5,155

-0.3%

Gross profit

65,95048.0%

71,533

48.3%

5,583

0.3%

SG&A expenses

62,84245.8%

67,533

45.6%

4,691

-0.2%

Operating income

3,107

2.3%

4,000

2.7%

893

0.4%

Ordinary income

3,233
,

2.4%

4,000
,

2.7%

767

0.3%

Net income

1,583

1.2%

3,000

2.0%

1,417

0.8%

Senshukai will shift from solidifying its foundation to achieving steady growth in the second yearof its Medium-Term Management Plan.
Targeting higher sales and profits by further boosting efficiencies and synergies with subsidiaries.
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Net Sales Plan by Consolidated Business Segment for Fiscal 2012
(YoY Comparison)
108.2%
1082%
122,100(Millions of yen)
Fiscal 2011 results
Fiscal 2012 forecasts

112,879
92.4%
10 067
10,0679,300

124.9%
10,500
,
8,407
96.2%
4,159 4,000
4 000

120.1%
1,748

Mail-orderbusiness(catalogs +Internet)

Hanpukaibusiness

Bridalbusiness

Corporates
business

2,100

Other
businesses

Targeting higher sales in Mail-order business through expansion off Internet sales
Targeting higher sales in Bridal business through opening of new facilities
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Fiscal 2012 Topics -1
New catalogs✤ Watashi no Kitai Fuku ✤Senshukai rearrangedg"Kurasufuku" into four
catalogs by lifestyle
Efficient media edited tomatch Senshukai's
merchandisingh di istrategy

For sparkly people

For gentle people

For fun people✤Bellenurse✤

For smiley people✤Lifestyle interior book✤
Catalogs for specificoccupations (nurses)
20% of our original
products
Planned circulation of
300,000 copies

New interior and sundries
catalog
Senshukai's original
interior brands

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Fiscal 2012 Topics -2
Cross-media promotions
to be continued in Fiscal 2012

Dears Brain Inc.
- Open "CANOVIANO Fukuoka"✤ Commercial using actress Manami Konishi✤ Exterior

Shift in focus from promoting
brand recognition to marketing
specific products/services
Aiming to capture a wide range ofwomen customers while focusing oncore base of women in their 30s- Broadcasts scheduled to begin
from February 15✤ Banquet room RUBINO"CANOVIANO Fukuoka"
Collaboration with owner-chef Takamasa Uetake of
RISTORANTE CANOVIANO (Daikanyama,(Daikanyama Tokyo),Tokyo) an
Italian restaurant famous for original ingredients andcooking methods- First restaurant to be managed by Dears Brain
Opened January 5

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Fiscal 2012 Topics -3
January 2012J
2012: NewN
websitesb ibybSenshukai Iihana Co., Ltd. opened
Present & gift shop

KURIMO ✤✤"KURIMO"

Website devoted to selling homegarden and gardening products

Hana Kurasu Yasai Kurasu"
Kurasu ✤✤"HanaJanuary 2012: Launch of distributionof new apps for smartphones
Maternity support

Ninpu memo
memo"✤✤"Ninpu

Childrearing support

Bebi memo
memo" ✤✤"BebiJanuary 2012: Introduction of product information coordination system (Guides users to
websites from Belle Maison Net)
It is now possible to search and purchase products of subsidiaries Mobakore Co., Ltd., Pet First Co., Ltd.,and Senshukai Iihana Co., Ltd. via Belle Maison Net
Strengthening listing advertising
As a new listing ad technique, utilized marketing ads* starting last October*A method by which Belle Maison Net ads are shown on different web pages to users who have viewed Belle Maison Net in the past

Senshukai will continue to actively develop new apps for smartphones and implement
new marketing measures for Belle Maison Net and subsidiary websites
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26

Senshukai's CSR Activities in Fiscal 2011
As a "Woman"
Smilel Company,"" Senshukai
h k willll conductdbusinessb
activities
that customers can relate with so they can live with smiles.
Supporting women:
support of “Pink
Pink Ribbon
Ribbon” campaign
Senshukai is involved in a varietyof activities to encourage breast
cancer screening.

✤ Senshukai donates ¥1 for each bra soldfrom Fiscal 2010 as part of its “Pink Ribbon
Sponsorship Products"
Donated ¥1.62mn in 2011

✤ Collaborated with Japan Cancer Society from
Fiscal 2010 to distribute free breast cancer
screeningg couponspDistributed 1,100 coupons in 2011

✤ Opened a booth at Pink Ribbon Smile
Walk Kobe in 2011
Distributed Senshukai's original
mascot "Pink Love Cat"

Promoting environmental preservation:
select and provide environment-friendly products
By eliminating waste indistribution, Senshukai is able toprovide organicpgcotton productspatroughly the same price as regularcotton products.
Senshukai hopes as many of its
customers as possible to takeadvantage of organic cotton.

✤ Senshukai widely promoted the environment

preservation, using the keyword "green," via its"Organic Cotton Promotion Campaign" in catalogs
issued from June 2011.
Provided approx. 50,000
samples of organic cotton
i ilmini-towels

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Capital Expenditures / Depreciation Expenses
Capital Expenditures(Millions of yen)

Depreciation Expenses(Millions of yen)
2,705

3,599
2 503
2,503

3,211

614
Intangible
assets

2,873

3,046

2,624

971

2,404 2,343

2,140

,
2,043
1,546 2,085

2,597
Property,plant andequipment

1,652

Fiscal
2008

Fiscal2009

1,326

Fiscal
2010

1,556
961
Fiscal
2011

Fiscal2012 (fct.)

Fiscal
2008

Fiscal
2009

Fiscal
2010

Fiscal
2011

Fiscal2012 (fct.)

Property, plantlandd equipment increased
d due
d to theh opening off a new facility
f lin subsidiary Dears Brain Inc.
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Schedule of Dividends and Results Announcements
Senshukai’s
h k ’ basicbpolicylregardingddividends
d d d is to appropriately
l return profits
f toshareholders by maintaining stable dividends that take into account a payout ratio whileat the same time strengthening the business foundation with retained earnings.
Based on this policy and in light of Fiscal 2011 consolidated results, Senshukai plans to
pay a total annual dividend of 14 yen per share comprised of an interim dividend of 7 yen
per share and a year-end dividend of 7 yen per share, which has been initially planned.
For Fiscal 2012, Senshukai plans an annual dividend of 20 yen per share (10 yen each ati t i andinterimd year-end),d) ffor a payoutt ratio
ti off 28
28.9%.
9%
April 27 (Fri)First quarter of Fiscal 2012

July 26 (Thu)

Second quarter of Fiscal 2012

July 27 (Fri)Presentation for earnings for second quarter of Fiscal 2012 (Tokyo)

October 26 (Fri) Third quarter of Fiscal 2012

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

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29

WomanSmile
Company
Smiles are the creator of happinesshappiness.
A smile on one face, and then another,is a promise of a brighter tomorrow.
Senshukai is a company
that delivers smiles to women’s daily lives,and by doing so, makes the world happy.

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30