Senshukai Co., Ltd.
Fiscal 2009 Earnings Presentation
January 28, 2010

1
Copyright SENSHUKAI Co.,Ltd. All Rights Reserved.

Contents. Results of Consolidated Operations for Fiscal 2009
. Progress on the Medium-Term Management Plan

(Fiscal 2008 – 2010). Consolidated Earnings Forecasts for Fiscal 2010
. Future Outlook. Reference Materials

2. Results of Consolidated Operations for Fiscal 20093

Fiscal 2009 Consolidated Results Highlights(Millions of yen)

Net Sales

Net Sales¥147.3bn (-6.9%)

Operating Income- ¥2.4bn (-)

Net Income- ¥3.8bn (

-

)

3,000

180,000

147,292

150,000

Net Income
2,000

Second half

2,413

158,285

120,000

Sales declined YoY as the deteriorating
economy weighed on consumer
sentiment, and due to unfavorable
weather

Operating Income

79,0742,000First half

733

1,015

0

-510

1,000

70,9841,398

090,000-4,544-2,000-5,761-474-4,000Operating income turned negative due to60,000a decline in gross profit from falling sales,
and an increase in the cost-of-sales ratio
from the introduction of more low-priced
goods and an increase in valuation losses 30,000-1,000-3,811-1,931

79,211

76,308-6,000-2,000-6,271-2,405

Net income was negative, despite foreignexchange gains, due to extraordinary
losses booked for loss on valuation of
investment securities-8,000-3,0000
Fiscal
2008

Fiscal
2009

Fiscal
2008

Fiscal
2009

Fiscal
2008

Fiscal2009

4

Consolidated Results of Operations for Fiscal 2009 (YoY Comparison)(Millions of yen)

Fiscal 2008

Fiscal 2009

% to Net Sales

YoY change% to Net Sales

Amount%Net Sales

158,285-

147,292--10,993-6.9%

Cost of Sales

81,912

51.7%

78,92753.6%-2,985-3.6%

Gross Profit

76,37348.3%

68,36446.4%-8,009-10.5%

SG&A Expenses

73,96046.8%

70,77048.0%-3,190-4.3%

Operating Income

2,413

1.5%

-2,405-1.6%-4,818-

Ordinary Income-4,553-2.9%-1,410

-1.0%

3,143

-

Net Income-6,271-4.0%-3,811

-2.6%

2,460

-

5

Consolidated Balance Sheet for Fiscal 2009 (YoY Comparison)(Millions of yen)Dec, 31, 2008 Dec, 31, 2009

Difference

Remarks

AssetsCurrent assets

49,99842,117-7,881Inventories: promoted a policy of inventory reduction

Noncurrent assets

54,06049,720-4,340Investment securities: sale of stock, impairment loss, etc.
Deferred tax assets: decreased due to transfer

Total assets
Liabilities

104,059

91,837-12,222

Current liabilities

54,15341,321-12,832

Noncurrent liabilities

5,631

12,6096,978

Total liabilities

59,78453,930-5,85454,83048,140-6,690-10,584-10,247

337

Minority interests

29

14

-15

Total net assets

44,27437,906-6,368

Total liabilities and net assets

104,059

91,837-12,222

Net Assets
Shareholders’ equity
Valuation andtranslation adjustments

Notes and accounts payable-trade: decreased due to lower
purchases
Short-term loans payable: decreased due to repayments
Forward exchange contracts: cancellation of derivative contracts,
etc.
Bonds payable: increased due to issuanceLong-term loans payable: borrowed money for capital
investment

Retained earnings: booked a net loss
Treasury stock: decreased due to purchase6

Net Sales by Business Segment for Fiscal 2009 (YoY Comparison)(Millions of yen)

Fiscal 2008

-6.9%

Fiscal 2009

158,285
147,292-9.3%

160,000

131,886

140,000

119,610120,000
100,000
80,00060,000+19.2%-10.6%

40,00020,00012,698 11,357

13,69916,3250
Hanpukai Business

Catalog Business

Other Businesses

Consolidated

7

Trend in Sales by Product Category-7.4%(Millions of yen)

63,26058,575-15.4%
34,65729,312-10.6%-8.9%
23,586+24.5%
21,495

16,931
15,12917,051-7.0%

13,692

6,157 5,728

ApparelFashion accessories

Interior goods

Daily sundries

Foods

OthersIn the “interior goods” category, sales were particularly weak for furniture, storage products, and fabrics
The “others” category saw a contribution from the subsidiary Dears Brain which operates the wedding business8

Current Situation of Catalog BusinessNet sales(Millions of yen)

Fiscal 2008

Fiscal 2009

Difference

131,886

119,610-12,276

Number of active
customers(10,000 members)

387

371

-16

Average sales per
customer (Yen)

12,953

12,267

-686

2.9

2.9

Annual order amountper customer (Yen)37,56035,470-2,090Catalog circulation(10,000 volume)

9,500

8,800

-700

Annual order frequency
per customer (Times)-

Due to fewer new
members
Decline due to anincrease in online
orders and theintroduction of more
low-priced products

9Current Situation of Hanpukai Business

Fiscal 2008

Fiscal 2009

Difference

Net sales(Millions of yen)

12,698

11,357-1,341

Number of groups

81,00070,000-11,000

Number of individuals

156,000

142,000-14,000

Number of groupmembers

282,000

245,000-37,000

Number of individual
members

156,000

142,000-14,000

Due to a slump in new
product sales

Declines due to failure
to meet our target of
improving themembership retention
rate despite theintroduction of Belle
Maison incentive points

10Current Situation of Other Businesses(Millions of yen)

Net sales

Fiscal 2008

Fiscal 2009

Difference

B-to-B operations

6,315

6,096

-219

Storefront business(excluding outlet)

668

848

180

Pet First Co., Ltd.

1,746

1,539

-207

Dears Brain Inc.

2,928

6,788

3,860

Others

2,042

1,054

-988

Decline in advertisingbusiness sales and gift
catalog sales
Increase in Kurasu
Fuku store openings(total network of 11
stores)Booking of sales for the fullyear in Fiscal 2009
(we booked sales for justsecond half in Fiscal 2008)
Lower sales at B·B·S

Total

13,69916,3252,626*Dears Brain: subsidiary operates the wedding business *B.B.S: subsidiary in charge of apparel business
11

Overview of Cost-of-Sales Ratio and SG&A Expenses

Cost-of-sales Ratio (Consolidated)+1.9%

SG&A Expenses (Consolidated)-3,190

51.7%

53.6%

Fiscal 2008

Fiscal 2009

Purchasing cost ratio roughly flat YoY
Increase in amortization and valuation losses•Amortization +270 million yen•Valuation losses +2,330 million yen(change in accounting standards)

73,960(Millions of yen)

70,770Fiscal 2008
Fiscal 2009
Packing and freightage expenses: decline due toimprovement in the rapid delivery ratio anddeliveries-to-orders ratio -1,340 million yen
Printing expenses: decline due to circulation reduction-1,460 million yen
Commission fee: decline in system-related
12
expenses -660 million yen

Non-operating Income / Non-operating Expenses(Millions of yen)
Fiscal 2008

Fiscal 2009

Difference

Interest expenses

162

317

155

Foreign exchange
losses5,904Commission fee

-

450

450

21

Bond issuance cost

-

127

127

1,403

1,403

Loss on valuation ofcompound financial
instruments

1,331

Non-operating income Fiscal 2008

Fiscal 2009

Difference

270

90

-180

Interest income

173

Dividend income
Gain onvaluation ofcompoundfinancial
instruments-

Foreign exchange
gains

-

314

21

141

Non-operating expenses--5,904--1,331

Other

481

320

-161

Equity in losses ofaffiliates

247

65

-182

Total

924

2,148

1,224

Other

245

194

-51

Total

7,890

1,154

-6,736

Elimination of loss on valuation of compound financial
instruments due to higher exchange rate and share prices
Elimination of foreign exchange losses
13Extraordinary Income / Extraordinary Losses(Millions of yen)
Extraordinary income Fiscal 2008

Gain on sales of
noncurrent
assetsOther
extraordinary
income
Total

245
-

Fiscal 2009

1
42

245

43

Difference

Extraordinary losses

Fiscal 2008

Fiscal 2009

Difference-244

Loss on sales andretirement of
noncurrent assets

759

95

-664

42

Loss on valuation of
investment securities

594

573

-21

-202

Loss on sales ofinvestment securities

28

576

548

Impairment loss

153

356

203

Other

52

124

72

Total

1,587

1,726

139

Increase in loss on sales of investment securities
Increase in impairment loss

14

Fiscal 2009 Topic I
Opened “Belle Maison LABS” to test
new expression technologies andsearch methods for Belle Maison Net
Research choreographing of“recognition” and “fun” in shopping

From Fiscal 2010 we will include all
brassieres in our “pink ribbon campaign”
to support women
We will contribute one yen for each
brassiere sold (we sold 1.75 million
units in Fiscal 2008)

http://www.bellemaison.jp/pink
Belle Maison Lifestyle Laboratory madeFiscal 2010 lifestyle forecasts in its issue“Hyoban Shohi no Jidai” (“Age of
Reputation Consumption”)

http://www.bellemaison.jp/labs
15

Fiscal 2009 Topic II

Staged Suga Shikao’s first overseas live concert& triumphant homecoming performance
December 7
LondonDecember 14 Tokyo
December 18 Osaka© Office Augusta

Senshukai & JDN co-sponsorshipFirst Creative Competition
Staged “1000cc”
November Final screening process concludes
11 designs chosen for awards and commendation© Office Augusta

http://www.senshukai.co.jp/
main/top/slive/slive_index.htm

http://www.japandesign.ne.jp/1000cc/
16

. Progress on the Medium-Term Management Plan
(Fiscal 2008 – 2010)17

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

Number of Stores and Sales(Millions of yen)

(Millions of yen)Internet only

Via catalog(Number of stores)
Store sales

Number of stores

4,000

40

80,000

31
28

3,000

60,00026,00028,97530

27

24

26,03631,3132,000

40,00020
2,950

20,00031,00437,36741,09445,0000
Fiscal 2007
results

Fiscal 2008
results

Fiscal 2009
results

Fiscal 2010
targets

Customer reads a catalog then purchases by Internet,
entering catalog number* Internet only: Customer makes purchase by putting product into
online shopping cart

2,450
1,000

2,460
10

2,000

0

0
Fiscal 2007
results

Fiscal 2008 Fiscal 2009 Fiscal 2010
results
results
targets* Via catalog:

Sales at Kurasu Fuku stores rose steadily
18

SCM Promotion (Status of Each Indicator)

Reduction inin distributiondistributionReduction
related variablevariable cost
cost
relatedFiscal 2008
Results
Rapid delivery ratio

78.1%

Degree of
Improvement

Fiscal 2009
Results
82.5%

Delivery-to-order ratio

143.3%

135.0%

Import ratio

71.4%

69.8%

Reduction inin cost-ofcost-ofReduction
sales ratio
ratio
sales

Direct transaction ratio
Inventory turnover
Inventories (catalog products)

22.7%

21.0%

4.2 times

4.2 times¥15.2 billion¥11.3 billion

Improvement due tosharp decline in sales

Slight decrease due todecline in sales of apparel,a product category with ahigh import ratio

Steady reduction* 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.
* Inventories: Inventories of catalog products at the end of December

19

20

. Consolidated Earnings Forecasts for Fiscal 201021

Consolidated Earnings Forecasts for Fiscal 2010 (YoY Comparison)(Millions of yen)
Fiscal 2009

Fiscal 2010

% to NetSales

YoY change% to Net
Sales

Amount%Net Sales

147,292-

142,300--4,992-3.4%

Cost of Sales

78,92753.6%

72,97451.3%-5,953-7.5%

Gross Profit

68,36446.4%

69,325

48.7%

961

1.4%

SG&A
Expenses

70,77048.0%

67,22547.2%-3,545-5.0%

Operating
Income-2,405

-1.6%

2,100

1.5%

4,505

-

Ordinary
Income-1,410

-1.0%

2,050

1.4%

3,460

-

Net Income-3,811

-2.6%

1,650

1.2%

5,461

-

We plan an annual dividend of 12 yen per share (6 yen in each of the first and second halves of the fiscal year),and a payout ratio of 31.5%
22Efforts to Restructure the Catalog Business
Variable Costs
Improve the efficiency of distribution centers and call centers(consolidate and relocate distribution warehouses)
Reduce order costs by shifting to online orders

Catalog Costs
Printing costs: Reduce circulation and review catalog editions
Production costs: Internalize photographing, and consolidate studios
Catalog mailing costs: Improve the efficiency of catalog distribution

Fixed Costs
Reduce IT costs
Reorganize and consolidate distribution facilities
Reduce other indirect costs at headquarters divisions
23

Projected Net Sales by Business Segment for Fiscal 2010 (YoY Comparison)(Millions of yen)

Fiscal 2009

Fiscal 2010 Forecast-3.4%

160,000

147,292-4.6%

140,000

119,610

142,300

114,148

120,000
100,000
80,00060,000+9.9%-10.1%

40,00020,00016,325 17,944

11,357 10,208

0Hanpukai Business

Catalog Business

Other Businesses

Consolidated

24

. Future Outlook

25

Main Initiatives in the Current Fiscal Year
I. Further expand the Internet business, and establish a new earnings model
A. Establish a Belle Maison Net Promotion Office
Expand the current Internet business

Gift & Gourmet Business DivisionChild Care Business Division

Lifestyle Business Division

Belle Maison Net
Promotion OfficeFashion Business Division

We plan to reform the current vertical structureof the Internet business in which each division is
responsible for its respective field, into ahorizontally integrated structure to better focus
on customer needs and expand sales

26

Main Initiatives in the Current Fiscal Year
I. Further expand the Internet business, and establish a new earnings model
B. E-commerce Development Department(Tokyo Business Division)

Business Portfolio
e-commerce baseDevelop uncharted worlds
separate from Belle Maison

Develop a new businessmodel unrelated to productsales

Start field 1
New
New businessbusiness
model
model for
for
BtoB
and
BtoB and
BtoBtoC
BtoBtoCNew
New channel
channeldevelopment
development++
New
New businessbusiness
model
model

Start field 3
New
New businessbusinessmodel
unrelatedmodel unrelatedtoto productproduct sales
salesBlue ocean (uncharted markets)

Develop a new businessmodel in uncharted markets
and new channels

Red ocean (existing markets)

Begin a new business modelin the existing BtoB and
BtoBtoC markets

Start field 2

New concept base
*The size of the bubble represents the approximate size of the market. 27

Main Initiatives in the Current Fiscal Year
II. Coalescence of organizational functions
Consolidate the functions of planning divisions

Belle Maison Lifestyle Research Department

 Surveys, lifestyle information gathering, and information dispatch(“Hyoban Shohi no Jidai” )Creative Research and Development Section

 Tokyo: Added value-type planning Osaka: Antenna-type planning
Monthly Business Division, Lifestyle Planning Division (markets of office vending box)

 Ongoing planning and development of original products28

Main Initiatives in the Current Fiscal Year
III. Development and sales planning of mega-hit products
We want to change the customer image of Senshukai and Belle Maison
products from “nice, but expensive” to “good quality and happy prices” tosharply expand our customer base and boost sales.
Pamphlets

A4 variant, quarto, eight pages

Products

5-6 items

Issue period

April (schedule)

Circulation

Approx. 3 million (first edition)ÆAim to expand to 10 million in the future

Editions

Approx. four per year (two in this year)

Distribution target

Our customers, business partners,
and all other stakeholders
Open notice through newsletters, mass media, and web advertisements

Method of product selection(Ex.) Have each division put forward candidates for mega-hit products from among
the products they handle; have the planning division polish the products with ideas
and other added value; sell the products in collaboration with their respective
manufacturers
Donations

We will donate 5 yen to the international NGO “Plan Japan” for each product sold;collaboration with “Because I am a Girl?” campaign.
29

Main Initiatives in the Current Fiscal Year
IV. Reorganization of media, and the launch of a new catalog for men
Renew Belle Maison’s interior and sundries catalog!
Launch catalogs “sumutoco” and “Remie style”“Shin Sumai to Zakka” and “HOME BASE” → “sumutoco”“Shin Seikatsukan” → “Remie style”

Men’s kurasufuku
Issue date

March (schedule)

Circulation

1 million

Æ We believe we have as many potential men
customers as we have women members
We aim to get them to shop through women
30

Main Initiatives in the Current Fiscal Year
V. Launch of a new catalog for customers in their 50s
We aim to capture new members among customers with a high recognition of theBelle Maison brand, and expand sales
Customer target: “around 50”
Scheduled launch: September
Distribution Chart of Belle Maison Members by Age Group

Target customers
in their late 40s to
50s
20

30

40

50

60

(Age)
31

32

. Reference Materials

33Reference 1: Internet-related Indicators
Internet Sales (including mobile sales)

Number of Internet Members(100 millions of yen)

800
557

600
455

303

400

623

313

663

290

671

260

(10,000 members)

800
542

600
Via catalog

400

606

664

467
389

288
200
167

254

310

373

411

Internet only

0

200
0

2005 2006 2007 2008 2009 (Fiscal year)

2005 2006 2007 2008 2009

(Fiscal year)

Mobile Sales(100 millions of yen)

160
120

126

131

137

141

108

102

108

111

Via catalog

18

20

29

39

Internet only

110

80
97
40
0

13

2005 2006 2007 2008 2009 (Fiscal year)
34Reference 2: Capital Expenditures / Depreciation Expenses

Capital Expenditures

Depreciation Expenses(Millions of yen)

4,000(Millions of yen)
3,000

3,506
3,211
3,000

1,382

614

2,500

2,624
2,000

2,179

2,167

971

2,000

1,500

954
1,564

Intangible
assets

2,123

1,000

1,652

2,514

Fiscal
2009

Fiscal2010
forecast

2,140

1,000

2,597

2,503
1,620

1,724

Fiscal
2006

Fiscal2007

1,213 Property, plant 500
and equipment

615
0

0

Fiscal
2006

Fiscal
2007

Fiscal
2008

Fiscal
2009

Fiscal2010
forecast

Fiscal
2008

35

Scheduled Earnings Announcements in Fiscal 2010

April 30 (Friday)

Earnings for first quarter of fiscal 2010

July 29 (Thursday)

Earnings for second quarter of fiscal 2010

July 30 (Friday)

Presentation for earnings
for second quarter of fiscal 2010 (Tokyo)

October 29 (Friday)

Earnings for third quarter of fiscal 2010

The forward-looking statements contained in this earnings presentation are
based on information that was available when this presentation was drafted.
Therefore the actual results and operating performance could be significantly
different to the forecasts due to the effects of various factors in the future.

36