Senshukai Co., Ltd.
Second Quarter of Fiscal 2012 Earnings Presentation
July 26, 2012

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Contents

1. Results of Consolidated Operations for 2Q Fiscal 2012
2. Overview by Segment
3. 2Q Fiscal 2012 Results Relative to Initial Plan
4. Consolidated Earnings Forecasts for Fiscal 2012

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1. Results of Consolidated Operationsfor 2Q Fiscal 2012

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Consolidated Results of Operations for 2Q Fiscal 2012 (YoY Comparison)(Millions of yen)

2Q Fiscal 20112Q Fiscal 2012

% to netsales

YoY change% to net
sales

Difference

Percentage
points

Net sales

69,542-

74,031

-

4,489

-

Cost of sales

35,73951.4%

38,999

52.7%

3,260

1.3%

Gross profit

33,80348.6%

35,031

47.3%

1,228

-1.3%

SG&A expenses

31,40445.2%

34,269

46.3%

2,865

1.1%

Operating income

2,398

3.4%

762

1.0%

-1,636-2.4%

Ordinary income

2,631

3.8%

1,180

1.6%

-1,451-2.2%

Net income

2,166

3.1%

914

1.2%

-1,252-1.9%

Net sales rose significantly YoY due to an increase in members and Internet sales
Operating income declined due to a rise in the cost-of-sales ratio and higher SG&A expenses

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Consolidated Balance Sheet for 2Q Fiscal 2012
AssetsDec. 31,2011

Jun. 30,
2012(Millions of yen)

Difference

Current assets

44,482

38,710-5,772

Noncurrent assets

45,95946,920961

Total assets

90,441

85,630-4,811

Remarks
Cash and deposits decreased.
Merchandise and finished goods decreased due to the lower
inventories.
Land increased due to the acquisition by a consolidated
subsidiary

Liabilities
Notes and accounts payable-trade decreased due to thelower inventories.
Short-term loans payable decreased due to the repayments.
Forward exchange contracts decreased due to theimprovement in market value.

Current liabilities

41,24435,187-6,057

Noncurrent liabilities

7,753

7,828

75

Total liabilities

48,99743,015-5,982

Shareholders’ equity

50,91051,521611

Retained earnings increased due to the booking of net
income.

Accumulated othercomprehensive income-9,465-8,906

559

Deferred losses on hedges decreased due to theimprovement in market value.

Total net assets

41,44442,615

1,171

90,441

85,630-4,811

Net assets

Total liabilities
and net assets

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Trend in Monthly Sales (YoY Comparison)
Consolidated Net Sales+14.7%+9.7%+7.4%+4.5%+3.7%-0.8%
Jan.

Feb.

Mar.

Apr.

May

Jun.

Sales fell in May as unusually cool weather weighed on sales of summer items.

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Consolidated Sales by Product Category (YoY Comparison)(Millions of yen)111.1%

2Q Fiscal 2011

2Q Fiscal 2012

30,000112.4%

20,000100.2%

110.4%

91.1%

10,00085.7%
0Apparel

Fashionaccessories

Interiorgoods

Householdgoods

Foods

OthersApparel: strong sales of sportswear, maternity wear, lingerie, underwear, etc.
Interior goods: strong sales of furniture, fabrics and bedding
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Net Sales by Consolidated Business Segment (YoY Comparison)(Millions of yen)

107.3%
2Q Fiscal 2011

62,10257,85991.7%
4,946

2Q Fiscal 2012131.4%
4,738

4,538
3,607

81.6%
2,305

1,881

93.5%
824 771

Mail-orderbusiness(catalogs +Internet)

Hanpukaibusiness

BridalbusinessCorporatesbusiness

OthersMail-order business sales rose due to higher sales of Internet-only products. TV advertising also benefited sales.
Bridal business sales rose due to the drop out of the impact from the earthquake, and a contribution from theopening of “CANOVIANO Fukuoka.”
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8Overview of Consolidated Cost-of-sales Ratio and SG&A Expenses (YoY Comparison)
Consolidated SG&A Expenses

Consolidated Cost-of-sales Ratio+2,865

+1.3%

51.4%

(Millions of yen)

52.7%

34,26931,404

2Q Fiscal 2011

2Q Fiscal 2012

Increase in sales of Internet-only products which
tend to have a high cost-of-sales ratio.
Increase in bargain sales and inventory clearancesales.

2Q Fiscal 2011

2Q Fiscal 2012

Sales expenses
Freightage and packing expenses:
Increase in shipments due to free shipping campaigns
Catalog costs:
Increase due to paper price hikes and the launch of newcatalogs
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92. Overview by Segment

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Overview of the Mail-order Business (Catalogs + Internet) (YoY Comparison)

2Q Fiscal 2011

2Q Fiscal 2012

Difference

Number of orders(10,000 orders)

551.2

621.3

70.1

Semi-annual number of active
customers (10,000 members)

263.8

291.0

27.2

Semi-annual number of newmembers (10,000 members)

36.4

45.5

9.1

Average sales per customer(Yen)

11,168

10,522-646

Semi-annual order frequency percustomer (Times)

2.09

2.13

0.04

Catalog circulation(10,000 volume)

3,724

3,627

-97

Steady increase in number of orders and active customers due to TV advertising and Internet-related measures
Average sales per customer declined due to free shipping campaigns, but order frequency per customer increased slightly

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11Internet-related Indicators(Millions of yen)Internet Sales

Amount of Smartphone Orders

1,839

41,27536,56833,215

9,315

226

9,526
Sales via
catalog

11,5192Q Fiscal 2011

31,960Internet-onlysales

27,042

2Q Fiscal 2011

2Q Fiscal 2012

Ratio of Internet-based Orders+3.8%

21,696

2Q Fiscal 2010

(Millions of yen)

63.6%

67.4%

2Q Fiscal 2011

2Q Fiscal 2012

2Q Fiscal 2012

Sales via catalog: Customer reads a catalog then purchases by Internet,
entering catalog number.
Internet-only sales: Customer makes purchase through the Internet byputting products into online shopping cart.

Internet-related measures: Activity targeting* through websites, e-mail, and recommendations*Website viewers are categorized according to their activity history, and products,
advertisements, and messages displayed according to their tastes and preferences
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12Overview of the Hanpukai Business (YoY Comparison)
2Q Fiscal 2011

2Q Fiscal 2012

Difference

Number of groups(10,000 groups)

6.4

5.8

-0.6

Number of group members(10,000 members)

19.2

17.2

-2.0

Number of individual members(10,000 members)

11.5

12.8

1.3

Total Hanpukai members(10,000 members)

30.7

30

-0.7

Hit products in first half
Cute and "smart"
towel/handkerchief thatconverts to a "pouch"

No.1

Moomin pocket handkerchief

Microfiber mini-mitten forwiping water and dust

No.2

Chokochoko mini-mitten

Underwear that lifts the hip

No.3“Bi line" hip pants

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13Overview of the Bridal Business (YoY Comparison)
2Q Fiscal 2011

Net sales (Millions of yen)

2Q Fiscal 2012

Difference

3,607

4,738

1,131

Guesthouses

13141

Weddings (Couples)

905

1,220

315

Average sales per wedding(10,000 yen)

384

378

-6

Reference
Change in breakdownof wedding market byOthers
venue
Restaurants

Weddinghalls

Guesthouses+14%Hotels* Source: Yano Research Institute“Wedding Industry Yearbook”

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Overview of the Corporates Business (YoY Comparison)(Millions of yen)

Breakdown of sales

2Q Fiscal 2011

2Q Fiscal 2012

1,646

1,274-372

Sampling

423

393

-30

Novelties

190

176

-14

Others

45

38

-7

Total

2,305

1,881-424

Contracting services

Difference

Contracting services: decreased due to end of contract with major outsourcing client

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3. 2Q Fiscal 2012 Results Relative to Initial Plan

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Results Compared to Initial Plan for 2Q Fiscal 2012
(Millions of yen)
2Q Fiscal 2012 (Initial plan)

2Q Fiscal 2012 (Results)

Relative to initial plan

% to netsales% to net
sales

Difference

Percentage
points

Net sales

73,900-74,031-

131-

Cost of sales

38,011

51.4%

38,999

52.7%

988

1.3%

Gross profit

35,88848.6%

35,031

47.3%

-857

-1.3%

SG&A expenses

34,18846.3%

34,269

46.3%

81

0.0%

Operating income

1,700

2.3%

762

1.0%

-938

-1.3%

Ordinary income

1,800

2.4%

1,1801.6%

-620

-0.8%

Net income

1,500

2.0%

914

1.2%

-586

-0.8%

Net sales were roughly in line with plan
Operating income was short due to an increase in the cost-of-sales ratio

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Differences in Cost-of-sales Ratio and SG&A Expenses
Relative to the Initial Plan for 2Q
Cost-of-sales Ratio(Millions of yen)

SG&A Expenses
+1.3%

+81

51.4%

52.7%

2Q Fiscal 2012
Initial plan

2Q Fiscal 2012
Results

Increase in sales of Internet-only products which
tend to have a high cost-of-sales ratio
Increase in bargain sales and inventory clearancesales.

34,18834,2692Q Fiscal 2012
Initial plan

2Q Fiscal 2012
Results

Increase in distribution-related costs as freeshipping campaigns and a higher ratio of Internetbased sales lowered average sales per shipment
Increase in printing costs from an increase incatalog requests
General cut in SG&A expenses
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4. Consolidated Earnings Forecasts for Fiscal 2012

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Consolidated Earnings Forecasts for Fiscal 2012 (YoY Comparison)(Millions of yen)
Fiscal 2011 results

Fiscal 2012 forecasts% to netsales

YoY change% to net
sales

Difference

Percentage
points

Net sales

137,261-

147,500-

10,239-

Cost of sales

71,311

52.0%

76,783

52.1%

5,472

0.1%

Gross profit

65,95048.0%

70,716

47.9%

4,766

-0.1%

SG&A expenses

62,84245.8%

67,416

45.7%

4,574

-0.1%

Operating income

3,107

2.3%

3,300

2.2%

193

-0.1%

Ordinary income

3,233

2.4%

3,500

2.4%

267

0.0%

Net income

1,583

1.2%

2,850

1.9%

1,267

0.7%We expect net sales to increase from an increase in Internet-based sales, and the cost-of-sales ratio to increaseslightly due to higher sales of Internet-only products and other factors
We expect SG&A expenses to rise generally, but to decline slightly as a percentage of sales, boosting profits YoY
at every level

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Net Sales Forecast by Business Segment for Fiscal 2012 (YoY Comparison)
108.3%(Millions of yen)

Fiscal 2011 results

122,233
112,87993.4%

122.0%

10,067 9,398

10,2608,407

Fiscal 2012 forecasts

95.9%
4,159 3,990

92.6%
1,748 1,619

Mail-orderbusiness(catalogs +Internet)

Hanpukaibusiness

BridalbusinessCorporatesbusiness

OthersMail-order business: We forecast a steady increase. However, we forecast a modest decline in the Hanpukai business
Bridal business:
We forecast the opening of new facilities will contribute to a significant YoY increase in sales

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Second-half Topics in Fiscal 2012
Opening of new Kurasu Fuku stores (Saitama)

SOYOCA FUJIMINO opened on June 29th!
Third store in Kanto region
after LaLaport Shin Misato
and Chiba New Town stores
Total 13 stores

Dears Brain opens new facility in Kagoshima“The Peak Premium Terrace” to open in November!!
Two party rooms with balconies,
designed with a "Satsuma-kiriko"motif
Total 15 facilities
Total 23 banquet rooms

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Senshukai's CSR Activities in First-half Fiscal 2012
As a "Woman Smile Company," Senshukai will conduct business activities
that customers can relate with so they can live with smiles.
Post-quake reconstruction supportPresented Mother's Day carnations to mothers in all temporary homes in Ofunato City
To support evacuees, Senshukai, its group company
Senshukai Iihana, and business partner Saito Seika
collaborated in delivering a set of carnations and candy to
all 1,800 temporary homes in Ofunato City in Iwate
Prefecture under the slogan of "The power of flowers tomake people smile."
The campaign was widely reported by
local TV and media outlets

June environment month
PR of eco-friendly products through spread of organic cotton
By eliminating waste in distribution, Senshukai is ableto provide organic cotton products at roughly the same
price as regular cotton products. We would like tospread understanding about the environment by having
many customers use organic cotton.
We held a PR event at a Tokyo girls school.
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Dividends and Results Announcements Scheduled in Fiscal 2012
Dividend forecast
Our basic policy is to continuously return profits to shareholders targeting a consolidated
payout ratio of 30%.
We plan a dividend of 10 yen per share in cumulative 2Q.
This, together with our divided forecast of 10 yen per share for the year-end, gives an annual
dividend of 20 yen per share for a payout ratio of 30.4%.
Dates of earnings announcements for Fiscal 2012

Earnings for the third quarter of Fiscal 2012

Friday, October 26

Earnings for the Fiscal 2012

Thursday, February 7, 2013

Earnings Presentation for the Fiscal 2012

Friday, February 8, 2013

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

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