Summary of Financial Results for the Third Quarter of Fiscal Year 2019
(Nine Months Ended September 30, 2019)[Japanese GAAP]
October 31, 2019

Company name: SENSHUKAI CO.,LTD.

Stock exchange: Tokyo Stock Exchange, First Section
Stock code:
8165
URL: https://www.senshukai.co.jp
Representative:
Mr. Kenji Kajiwara, President and Representative Director
Inquiries:
Mr. Tetsuya Takahashi, General Manager, Corporates Headquarters
Tel: +81-6-6881-3220
Scheduled date of filing of Quarterly Report: November 13, 2019
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 2019 (January 1, 2019 – September 30, 2019)(1) Consolidated operating results (cumulative)(Percentages represent changes from the same period of the previous fiscal year)
Profit attributable toOperating profit
Ordinary profit
owners of parent

Net sales

Millions of yen%

3Q 2019
64,980 (19.8)
1,257
3Q 2018
81,025 (10.3)(4,476)
Note: Comprehensive income (millions of yen) 3Q 2019: 7,908 (-%)

Millions of yen%-

Net income per share
3Q 2019
3Q 2018

Millions of yen%

Millions of yen

%

8,372
(4,623)-

1,666(4,232)
3Q 2018: (4,896) (-%)

Diluted net income per share

Yen

Yen

208.32(101.85)

158.01-(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Equity ratio

Millions of yen

3Q 2019
72,84342,502
Fiscal Year 201875,94934,853
Reference: Shareholders’ equity (millions of yen) 3Q 2019: 42,502

Net assets per share
%

Yen

58.3
45.8
Fiscal Year 2018: 34,768

879.62689.05

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

Yen

Year-end

Yen

Total
Yen

Yen

Fiscal Year 2018
0.00
0.00
Fiscal Year 2019
0.00
Fiscal Year 2019 (forecasts)
Notes: 1. Revision to the most recently announced dividend forecast: None
2. Dividend forecast for the Fiscal Year 2019 has not been determined at this time.
3. The dividend figures above show dividends for common shares. Please refer to “Dividends of classified stock”(after-mentioned) for information on dividends for shares whose rights are different from those of the Senshukaicommon shares.

0.00-

3. Consolidated Outlook for Fiscal Year 2019 (January 1, 2019 – December 31, 2019)(Percentages represent changes from the same period of the previous fiscal year)
Profit attributable to Net income per
Operating profit
Ordinary profit
owners of parent
share

Net sales
Millions of yen%

Millions of yen %Millions of yen %Full Year 2019
89,000 (21.5)(700) Note: Revision to the most recently announced consolidated outlook: None(200) -

Millions of yen %

6,300

-

Yen

156.75

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

(4) Number of shares outstanding (common shares)
1) Number of shares outstanding at the end of the period (including treasury shares)
3Q 2019:52,056,993 sharesFiscal Year 2018:

52,230,393 sharesFiscal Year 2018:12,040,107 shares

3Q 2018:

45,392,565 shares

2) Number of treasury shares at the end of the period
3Q 2019:

11,865,432 shares

3) Average number of shares outstanding during the period
3Q 2019:

40,190,904 shares

Note: The Senshukai shares held by the trust that are recorded as treasury shares under shareholders’ equity is included in
the number of treasury shares, and is deducted from the number of shares that is used to calculate the average
number of shares outstanding. On April 19, 2019, the Board of Directors approved a resolution to terminate thestock compensation plan that is linked to results of operations. As a result, 173,400 shares of Senshukai stock thatwere held by the trust were cancelled on June 21, 2019.
* This quarterly financial report is not subject to quarterly review by certified public accountants or auditing firms.
* Cautionary statement with respect to forward-looking statements
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
and Other Forward-looking Statements.”(Reference) Dividends of classified stock
Breakdown of dividend per share for classified stock whose rights are different from those of common shares areshown below.
Class A preferred stock

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

Yen

Fiscal Year 201815,178,083.00
Fiscal Year 2019
20,000,000.00
Fiscal Year 2019 (forecasts)
Note: Five shares of the Class A preferred stock were issued on March 30, 2018.

Class B preferred stock

1Q-endYen

Yen

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

Total
Yen

Yen

-

15,178,083.00

30,356,166.00

20,000,000.00

40,000,000.00

Dividend per share
3Q-end2Q-endYear-end

Yen

Year-end

Total

Yen

Yen

Yen

-

-

-

-

-

(Reference) Breakdown of dividends paid from the capital surplus
Of the dividends for the fiscal year 2018, breakdown of dividends paid from the capital surplus are shown below.
Record date2Q-endDividend per share (Yen)
15,178,083.00
Total dividends (Millions of yen)75
Note: Reduction rate in net assets due to the dividends paid from net assets

Year-end
15,178,083.00
75
2Q-end: 0.002

Total
30,356,166.00
151
Year-end: 0.002

Of the 2Q-end dividends for the fiscal year 2019, breakdown of dividends paid from the capital surplus are shown
below.
Record date2Q-endDividend per share (Yen)
20,000,000.00
Total dividends (Millions of yen)100
Note: Reduction rate in net assets due to the dividends paid from net assets is 0.003.

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

2(2) Explanation of Financial Position

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

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)(3) Notes to Quarterly Consolidated Financial Statements

7
8(Going Concern Assumption)

8(Significant Changes in Shareholders’ Equity)

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

8(Additional Information)

8(Segment Information)

9

3. Other
Important Information about Going Concern Assumption

1010

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the cumulative third quarter (January 1 to September 30) of 2019, the Japanese economy was steady with thesupport of the government’s economic and monetary policies, improvements in corporate earnings and theemployment situation. However, the outlook remains uncertain because of weakness in exports and corporate
production in certain sectors, concerns over a possible downturn in the economy due to the recent consumption
tax hike, the ongoing U.S.-China trade friction, slowing economic growth in China and other reasons.
In Japan’s retail industry, even though demand for discounted products and last-minute demand ahead of theconsumption tax hike surged temporarily, personal consumption was sluggish due to unseasonal weather,including low temperature and excessive rain in July, and consumers’ defensive stance about spending because ofconcerns over sluggish real income growth. As a result, the consumption environment remains challenging.
Net sales in the cumulative third quarter were down 19.8% year-over-year to 64,980 million yen. This decrease
was attributable primarily to measures to optimize the size of the mail-order business and the exclusion fromconsolidation of Belle Neige Direct Co., Ltd. and Mobacolle Co., Ltd.
There was an operating profit of 1,257 million yen compared with a 4,476 million yen loss in the same period of
2018. This was attributable to measures to lower the cost of sales ratio and overall selling, general andadministrative expenses. Ordinary profit was 1,666 million yen compared with a loss of 4,232 million yen in thesame period of 2018 due to the booking of share of profit of entities accounted for using equity method. Profit
attributable to owners of parent was 8,372 million yen compared with a loss of 4,623 million yen in the same
period of 2018 mainly due to a gain on sales of non-current assets and a gain on sales of investment securities.
Overview by segment are as follows.
In previous years, the insurance and credit card business was included in Others. Due to its increasing importance,
this business became a separate reportable segment beginning with the second quarter of 2019. Prior-year segment
information has been revised to reflect the new segment classification to permit comparisons.
(Mail-order Business)
The catalog and Internet businesses are the primary components of this segment. Consolidated sales were down
27.8% year-over-year to 44,821 million yen. This was the result of measures to significantly alter the structure of
Belle Maison, the core business of this segment. Activities included optimizing the scale of this business andexcluding Belle Neige Direct Co., Ltd. and Mobacolle Co., Ltd. from consolidation. There was an operating profitof 142 million yen compared with a 5,285 million yen loss in the same period of 2018. This improvement was
mainly the result of a higher gross profit margin and measures to reduce fixed expenses, such as a reexaminationof the workforce.
(Bridal Business)
In this segment, where the main activity is the house wedding business, a new location started operations in thecity of Kagoshima during the cumulative third quarter of 2019. The bridal business performed well during the
cumulative third quarter as average sales per weddings increased, mainly at existing locations.
As a result, consolidated sales increased 9.9% year-over-year to 14,751 million yen and operating profit increased
32.0% year-over-year to 667 million yen.
(Corporates Business)
Consolidated sales in the corporates business, which provides products and services to corporations, decreased
5.0% year-over-year to 3,663 million yen. Operating profit increased 26.8% year-over-year to 300 million yen.

(Insurance and Credit Card Business)
Consolidated sales in the insurance and credit card business, which provides insurance and credit card services
primarily to Belle Maison members, decreased 2.3% year-over-year to 417 million yen. Operating profit increased
84.7% year-over-year to 227 million yen.
(Others)
Consolidated sales in other businesses, which include childcare support business and manufacturing and sales ofcosmetics, increased 7.6% year-over-year to 1,326 million yen. There was an operating loss of 80 million yen
compared with a loss of 57 million yen in the same period of 2018.
(2) Explanation of Financial Position(Balance sheet position)
Assets totaled 72,843 million yen at the end of the third quarter of 2019, a decrease of 3,105 million yen from theend of 2018.
Current assets increased 1,694 million yen to 41,989 million yen. The main factor was an increase of 2,959
million yen in cash and deposits while there was a decrease of 1,103 million yen in accounts receivable-other.
Non-current assets decreased 4,799 million yen to 30,853 million yen. The factors included decreases of 3,322
million yen in property, plant and equipment, 118 million yen in intangible assets and 1,358 million yen in
investments and other assets.
Current liabilities decreased 9,517 million yen to 19,251 million yen. The main factors were decreases of 4,340
million yen in current portion of bonds with share acquisition rights, 3,673 million yen in other and 1,017 million
yen in electronically recorded obligations-operating. Non-current liabilities decreased 1,237 million yen to 11,089
million yen. The main factor was a decrease of 944 million yen in long-term loans payable.
Net assets increased 7,649 million yen to 42,502 million yen mainly due to booking of profit attributable toowners of parent of 8,372 million yen. As a result, the equity ratio was 58.3%.
Starting with the beginning of the first quarter of 2019, Senshukai has applied the “Partial Amendments to
Accounting Standard for Tax Effect Accounting” (Accounting Standards Board of Japan (ASBJ) Statement No. 28,
February 16, 2018), etc. Prior-year figures have been adjusted retroactively in order to facilitate comparisons.
(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements
Senshukai currently maintains its consolidated forecasts for fiscal year 2019 (January 1, 2019 to December 31,2019) that was released on July 25, 2019.
In the cumulative third quarter, operating and ordinary profits, and profit attributable to owners of p arent werehigher than anticipated. This is attributable to measures to lower the cost of sales ratio and overall selling, generaland administrative expenses as a part of business structure reform.
However, fourth quarter plans call for investing management resources for sales promotion to build up a strong
customer base. In addition, there are concerns over downside risks on earnings due to a possible slowdown in
consumer spending following the recent consumption tax hike. In view of these factors we have not revised theprevious earnings forecast.

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Millions of yen)
3Q 2019(As of Sep. 30, 2019)

Fiscal Year 2018
(As of Dec. 31, 2018)
AssetsCurrent assets
Cash and deposits

17,15020,109Notes and accounts receivable-trade

5,532

4,853

Merchandise and finished goods

9,732

9,316

Accounts receivable-other

6,110

5,007

Other

1,903

2,842

Allowance for doubtful accounts

(133)

(140)

40,29541,989Buildings and structures, net

13,606

12,086

Land

8,477

6,809

980

845

23,063

19,740

1,736

1,544

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

Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other

729

803

2,466

2,347

Investment securities

6,458

5,680

Other

3,846

3,229

Total intangible assets
Investments and other assets

Allowance for doubtful accounts

(180)

(143)

Total investments and other assets

10,123

8,765

35,65330,85375,94972,843

Total non-current assets
Total assets

(Millions of yen)
3Q 2019(As of Sep. 30, 2019)

Fiscal Year 2018
(As of Dec. 31, 2018)
Liabilities
Current liabilities
Electronically recorded obligations-operating

6,631

5,614

Accounts payable-trade

4,836

4,835

Short-term loans payable

1,468

1,255

Current portion of bonds with share acquisition rights

4,340

-

Income taxes payable

318

25

Provision for sales promotion expenses

305

246

Provision for bonuses

291

371

Other

10,575

6,902

Total current liabilities

28,76819,251Long-term loans payable

9,799

8,854

Net defined benefit liability69

3

Non-current liabilities

Provision for management board incentive plan trust
Asset retirement obligations

2

-

778

834

Other

1,677

1,396

Total non-current liabilities

12,327

11,08941,09630,340Total liabilities
Net assets
Shareholders’ equity
Capital stock

22,304100

Capital surplus

23,71239,544Retained earnings(3,526)

11,081

Treasury shares(6,932)(6,800)Total shareholders’ equity

35,55843,925605

306

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

60

(7)

(1,346)(1,516)

(61)

(152)

Remeasurements of defined benefit plans

(47)

(52)

Total accumulated other comprehensive income(789)(1,422)

84-

34,85342,50275,94972,843

Non-controlling interests
Total net assets
Total liabilities and net assets

(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
Income(Quarterly Consolidated Statement of Income)(For the Nine-month Period)
3Q 2018(Jan. 1, 2018 – Sep. 30, 2018)(Millions of yen)
3Q 2019(Jan. 1, 2019 – Sep. 30, 2019)

Net sales

81,02564,980

Cost of sales

46,94232,350Gross profit

34,08332,630

Selling, general and administrative expenses

38,56031,372

Operating profit (loss)(4,476)

1,257Interest income

23

18

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

43

22

233

219

211

206

Other

196

158

Total non-operating income

708

624

Interest expenses

112

97

Commission fee

268

29

Other

83

88

Non-operating income

Non-operating expenses

Total non-operating expenses

464

215

(4,232)

1,666

Gain on sales of non-current assets

25

5,622

Gain on sales of investment securities

Ordinary profit (loss)
Extraordinary income

209

926

Gain on sales of shares of subsidiaries and associates-

336

Subsidy income

46

255

Total extraordinary income

281

7,141

Extraordinary losses
Loss on sales and retirement of non-current assets

069

Loss on reduction of non-current assets

46

230

Impairment loss

438

1

Loss on sales of shares of subsidiaries and associates-

4

Business structure reform expenses

78

25

Other

11

28

Total extraordinary losses

575

361

Profit (loss) before income taxes(4,526)

8,446

Income taxes

89

74

Profit (loss)(4,616)

8,372

Profit attributable to non-controlling interests

6-

Profit (loss) attributable to owners of parent(4,623)8,372

(Quarterly Consolidated Statement of Comprehensive Income)(For the Nine-month Period)
3Q 2018(Jan. 1, 2018 – Sep. 30, 2018)
Profit (loss)(Millions of yen)
3Q 2019(Jan. 1, 2019 – Sep. 30, 2019)(4,616)

8,372

Valuation difference on available-for-sale securities

(71)

(298)

Deferred gains or losses on hedges

(156)

(45)

(9)

2

(42)

(122)

(280)

(463)

(4,896)

7,908(4,903)

7,908

6

-

Other comprehensive income

Foreign currency translation adjustment
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

(3) Notes to Quarterly Consolidated Financial Statements(Going Concern Assumption)
Not applicable.
(Significant Changes in Shareholders’ Equity)
At the annual general meeting of shareholders on March 28, 2019, shareholders approved a resolution to eliminate
the retained earnings deficit. In accordance with Article 452 of the Companies Act, other capital surplus wasdecreased by 6,065 million yen and this amount was transferred to retained earnings brought forward. This
process decreased the capital surplus by 6,065 million yen and increased the retained earnings by 6,065 million
yen in the cumulative third quarter of 2019.
At the same meeting, shareholders also approved a resolution to reduce capital stock by 22,204 million yen to 100
million yen, pursuant to Article 447, Clause 1 of the Companies Act, and to transfer the entire reduction to othercapital surplus. This process decreased the capital stock by 22,204 million yen and increased the capital surplus
by 22,204 million yen in the cumulative third quarter of 2019.
In addition, on April 19, 2019, the Board of Directors approved a resolution to terminate the stock compensation
plan that is linked to results of operations. As a result, shares of Senshukai stock with a value of 131 million yenthat were held by the trust were cancelled on June 21, 2019. This process decreased the capital surplus by 131
million yen and the treasury shares by 131 million yen in the cumulative third quarter of 2019.
The result of all these measures was capital stock of 100 million yen, capital surplus of 39,544 million yen,retained earnings of 11,081 million yen and treasury shares of 6,800 million yen at the end of the third quarter of2019.
(Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements)(Calculation of tax expense)
The tax expenses are calculated by first reasonably estimating the effective tax rate after the application of t ax
effect accounting with respect to profit before income taxes for the fiscal year in which the quarter under review
falls, and multiplying that rate by the profit before income taxes for the quarter under review. However,Senshukai uses legally stipulated effective tax rates to calculate tax expenses for cases in which using estimatedtax rates gives a noticeably irrational result.
(Additional Information)(Application of the Partial Amendments to Accounting Standard for Tax Effect Accounting)Senshukai has applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28, February 16, 2018), etc. at the beginning of the first quarter of 2019. Accordingly, deferred tax
assets and deferred tax liabilities are reclassified and included in the investments and other assets section and thenon-current liabilities section, respectively.

(Segment Information)
I 3Q 2018 (Jan. 1, 2018 – Sep. 30, 2018)
1. Information related to sales and profit or loss for each reportable segment
Reportable segment
Insurance
Mail-order Bridal Corporates and credit
Sub-total
business business businesscardbusiness

Others(Note 1)

Total

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

Net sales
Sales to customers
62,092
13,4173,856
427
79,793
1,231
81,02581,025Inter-segment
712
0
126
0
839
41
881
(881)
sales or transfers
Total
62,805
13,417
3,982
427
80,633
1,273
81,906(881)
81,025
Segment profit(5,285)505
236
123(4,419)(57) (4,477)
0(4,476)(loss)
Notes: 1. Others represent the businesses which are not included in any of the four reportable segments and consist of thechildcare support business and manufacturing and sales of cosmetics.
2. The 0 million yen adjustment to segment profit (loss) is an elimination for inter-segment transactions.
3. Segment profit (loss) is adjusted to be consistent with the operating 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 business, an asset impairment loss was recorded to write down the book value of businessassets to the amount that can be recovered. These business assets include the business assets of Senshukai andits consolidated subsidiaries for which the recovery of the original investments is unlikely due to a decline inprofitability and business assets that Senshukai has decided to sell. This impairment loss was 430 million yen in
3Q 2018.
II 3Q 2019 (Jan. 1, 2019 – Sep. 30, 2019)
1. Information related to sales and profit or loss for each reportable segment
Reportable segment
Insurance
Mail-order Bridal Corporates and credit
Sub-total
business business businesscardbusiness

Others(Note 1)

Total

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

Net sales
Sales to customers
44,821
14,751
3,663
417
63,654
1,326
64,98064,980Inter-segment
798
0
0
799
0
799
(799)
sales or transfers
Total
45,62014,752
3,664
417
64,454
1,326
65,780(799)
64,980
Segment profit
142
667
300
227
1,338
(80)
1,257
0
1,257
(loss)
Notes: 1. Others represent the businesses which are not included in any of the four reportable segments and consist of thechildcare support business and manufacturing and sales of cosmetics.
2. The 0 million yen adjustment to segment profit (loss) is an elimination for inter-segment transactions.
3. Segment profit (loss) is adjusted to be consistent with the operating profit on the quarterly consolidated statementof income.

2. Information related to revisions for reportable segments
In previous fiscal years, the insurance and credit card business was included in Others. Due to its increasing
importance, this business became a separate reportable segment beginning with the second quarter of 2019.
The segment information for 3Q 2018 is prepared and disclosed based on the reportable segment classification
after the change.
3. Information related to impairment of non-current assets, goodwill, etc. for each reportable segment
No major events or changes occurred.

3. Other
Important Information about Going Concern Assumption
In the cumulative third quarter of 2019, Senshukai Group had a consolidated operating profit of 1,257 million yen,ordinary profit of 1,666 million yen and profit attributable to owners of parent of 8,372 million yen. However, in
2018, there was an operating loss of 4,063 million yen and a loss attributable to owners of parent of 6,027 million
yen. These losses create significant doubts about the going concern assumption. To eliminate these doubts andimprove results of operations, business structural reforms centered on the mail-order business are under way inaccordance with a medium-term management plan that started in 2019 and will end in 2021.
This plan includes the following initiatives:(1) Reduce the mail-order business to the proper size by cutting the number of sizes and models of merchandise
sold, lowering inventories and taking other actions.
(2) Improve operations by shortening lead times for producing merchandise, selling a higher percentage ofmerchandise at list prices, holding down the occurrence of surplus inventories, increasing joint activities with
suppliers and taking other actions.
(3) Rebuild the model for attracting customers, centered on catalogs, by establishing a model for attracting
customers that combines analog and digital elements, reexamining the media plan and catalog distribution
method, improving the quality of customer interactions by upgrading digital marketing and Internet customer
contact, and taking other actions.
(4) Reexamine the group’s organizational structure and human resource systems by combining and eliminatingorganizational units, using voluntary retirement program, and taking other actions.
(5) Cut costs and reduce assets, centralizing activities at each department, selling Osaka head office, an d taking
other actions.
(6) Reorganize the Senshukai Group by merging subsidiaries that perform similar functions, and taking otheractions.
Some initiatives in the mail-order business have already been completed in 2018, such as inventory reductions
and the adjustment of personnel expenses to the proper level. The benefits of these actions are already beginning
to appear in 2019. Furthermore, following the focus on structural reforms for business operations, Senshukai has
started implementing rules for maintaining proper inventory levels in order to reduce opportunity losses and holddown the occurrence of surplus inventories.
In addition, for renewed growth, the organizational units that determine and execute marketing activities will bebased on customers rather than merchandise and marketing uses an approach that reflects the behavior patterns ofcustomers, such as a new catalog that covers several merchandise categories that closely match customers ’ needsin these categories. We are also reinforcing digital content coordination between the Web and catalogs and havestarted distributing from September “Belle Maison Catalog Plus,” an application that allows product search andorder placement simply by clicking on selected product photographs linked to our catalogs.
We are determined to use these measures to construct a solid earnings foundation and renewed growth in order toachieve a recovery in sales and earnings and stabilize the performance of the Senshukai Group.
At the end of the third quarter of 2019, cash and deposits were 20,109 million yen. Senshukai also has a credit lineof 10 billion yen with financial institutions. Consequently, we believe there are no concerns about our liquidity
because we have a sufficient amount of working capital.
For these reasons, we believe there are no significant uncertainties regarding the going concern assumption.
* 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.