SENSHUKAI CO.,LTD. (Tokyo Stock Exchange, First Section: 8165)
Second Quarter of Fiscal 2014 Earnings Presentation

July 31, 2014

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Contents

1. Consolidated Results of Operations for 2Q Fiscal 2014
2. Overview by Segment
3. 2Q Fiscal 2014 Results Relative to Initial Plan
4. Consolidated Earnings Outlook for Fiscal 2014

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1. Consolidated Results of Operationsfor 2Q Fiscal 2014

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2Q Fiscal 2014 Consolidated Statement of Income (YoY Comparison)(Millions of yen)

2Q Fiscal 2013

2Q Fiscal 2014

% to netsales% to netsales

YoY change
Difference

Change in %to net sales

Net sales

72,736-74,048

-

1,312

-

Cost of sales

37,22251.2%

39,082

52.8%

1,860

1.6%

Gross profit

35,51348.8%

34,966

47.2%

-547

-1.6%

SG&A expenses

33,887

46.6%

33,132

44.7%

-755

-1.9%

Operating income

1,626

2.2%

1,833

2.5%

207

0.3%

Ordinary income

1,995

2.7%

1,946

2.6%

-49

-0.1%

Net income

1,241

1.7%

914

1.2%

-327

-0.5%

Net sales rose due to strong sales at existing facilities and the opening of new facilities in the bridal
business
Operating income rose due to the reduction in SG&A expenses despite the decline in the gross profit
margin resulting from the the yen’s depreciation and an increase in loss on valuation of goods
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2Q Fiscal 2014 Consolidated Balance Sheet (Compared with End-Fiscal 2013)

Dec. 31,2013

Jun. 30,
2014

Difference

Remarks(Millions of yen)

AssetsCash and deposits increased
Accounts receivable-trade and others decreased

Current assets

50,17750,186

9

Non-current assets

48,622

48,317-305

Total assets

98,80098,504-296

Current liabilities

39,63533,276-6,359Notes and accounts payable-trade decreased
Short-term loans payable decreased

Non-current liabilities

8,805

15,4096,604

Bonds with subscription rights to shares
increased

Total liabilities

48,44048,685245

Shareholders’ equity

54,97555,341

366

Retained earnings increased

Accumulated othercomprehensive income-4,615-5,522-907

Deferred gains or losses on hedges decreased

Total net assets

50,35949,818-541

Total liabilities and net assets

98,80098,504-296

Buildings and structures increased
Investment securities decreased

Liabilities

Net assets

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Fiscal 2014 Consolidated Statement of Cash Flows (YoY Comparison)(Millions of yen)

2Q Fiscal
2013

2Q Fiscal
2014

Difference

2Q Fiscal 2014 highlights
Increase in notes and accounts payabletrade:+¥5.7bn

Net cash provided by(used in) operating activities

Decrease in other current assets: +¥2.6bn

2,857

3,514

657

Income before income taxes and minority
interests:+¥1.7bn
Depreciation:+¥1.2bn

Decrease in other current liabilities: -¥9.5bn

Net cash provided by(used in) investing activities

511-1,290-1,801

Purchase of intangible assets:-¥0.3bn
Purchase of property, plant and equipment:-¥1.0bn
Proceeds from issuance of bonds with
subscription rights to shares:+¥6.9bn

Net cash provided by(used in) financing activities-2,843

2,122

4,965

Decrease in short-term loans payable:-¥4.1bn
Repayment of long-term loans payable:-¥1.2bn

Cash and cash equivalents at
end of period

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7,993

11,1183,125

6

Consolidated Sales by Business Segment (YoY Comparison)(Millions of yen)

0.2％
65,900

13年第2Q
2Q Fiscal
2013

66,042

14年第2Q
2Q Fiscal
2014

25.1％
5,890
4,708
-0.6％
1,887

1,875

-0.1％
239

Mail-order business

Bridal businessCorporates business

239

OthersMail-order business: Sales increased slightly as a result of higher demand prior to the April consumption
tax hike and the post-tax hike decline in demand
Bridal business:
Sales increased due to strong sales at existing facilities and the opening of new
facilities in Kamakura and Kyoto
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Consolidated Operating Income by Business Segment (YoY Comparison)(Millions of yen)

13年第2Q
2Q Fiscal
2013

8.9％

1,344

14年第2Q
2Q Fiscal
2014

1,464

163.3％
173-16.0％
212

178
255.0％

65

4
Mail-order business

Bridal businessCorporates business16
OthersMail-order business: Operating income increased due to the overall reduction of SG&A expenses
Bridal business:
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Operating income increased due to strong sales at existing facilities82. Overview by Segment

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9Mail-order Business – First Half Monthly Sales (YoY Comparison)
Mail-order Business –Monthly Sales
122.3%

YoY
100%
99.1%

Jan.

97.5%

Feb.

Mar.

94.7%

95.0%

93.6%

Apr.

May

Jun.

March:

Much higher because of the rush demand to make purchases prior to the April
consumption tax hikeApril-June: Sharp drop following the April consumption tax hike
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Mail-order Business – Sales by Product Category (YoY Comparison)(Millions of yen)

-1.6%

13年第2Q
2Q Fiscal
2013

29,075 28,615

14年第2Q
2Q Fiscal
2014

0.6％
17,081 17,178
-4.5％
-2.0%
9,705 9,267

7,527 7,379

68.2％
1,542

ApparelFashionaccessories

Interior
goods

Household
goods

2,594

Foods

3.9％
968 1,006
OthersApparel/fashion accessories: Sales were weak overall due to unfavorable weather and other factors
Foods:
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Additional sales from functional food products
11Overview of the Mail-order Business (YoY Comparison)

2Q Fiscal 2013

2Q Fiscal 2014

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

292.3

275.9

-16.4

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

48.1

44.0

-4.1

10,461

10,726

265

Semi-annual order frequency per
customer (Times)

2.09

2.12

0.03

Catalog circulation (10,000 volume)

3,563

3,531

-32

Average sales per order (Yen)

Difference

Average sales per order and order frequency per customer increased despite a decrease in thenumber of active customers
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12Internet-related Indicators(Millions of yen)

Ratio of Internet-based Orders

43,06643,865

70.5%

7,430

5,971

Internet Sales(including mobile sales)

41,275
Sales via
catalog

Internetonly sales

9,315

31,960

2Q
Fiscal 2013

35,63637,894

2Q
Fiscal 2013

Net sales

2Q
Fiscal 2014

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

In Fiscal 2014, a behavior targeting test is under way andimprovements are being made, such as a revision to themethod for displaying recommendations in productdescriptions for smartphone users.
We will continue to work on increasing CVR by improving
sales areas to match smartphones because channels forreceiving information and making purchases are different for
PCs and smartphones.
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74.1%

2Q
Fiscal 2014

Amount and Share of Smartphone Sales（Millions of yen)

2Q
Fiscal 2012

3.6％

Share of
sales

8,200
19％

4,958

13,15811％30％
2Q
Fiscal 2014

2Q
Fiscal 2013

Share of Website Visits by Smartphone Users(number of sessions)

13.4％
32.0%
2Q
Fiscal 2013

45.4%

2Q
Fiscal 2014

*CVR: The percentage of visitors to a company’s website that use the site to make a purchase.

13Differences in Cost-of-sales Ratio and SG&A Expenses
in the Mail-order Business (YoY Comparison)
SG&A Expenses

Cost-of-sales Ratio
1.9％(Millions of yen)

-1,268

51.2%

53.1%

30,937

2Q
Fiscal 201313年第2Q

2Q
Fiscal 201414年第2Q

2Q
Fiscal 201313年第2Q

29,66914年第2Q
2Q
Fiscal 2014

The cost-of-sales ratio increased due to theweaker yen.

Selling expenses:
Decrease in distribution-related costs due to ahigher average unit price of shipments (up 10%)The cost-of-sales ratio increased due tohigher share of sales from products sold atbargain prices and an increase in valuation
lossesReduction in printing costs from a smaller numberof catalog circulation and a review of paper use

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Decrease in cross-media advertising expenses(from spring and summer TV commercials to asingle spring TV commercial campaign)

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Overview of the Bridal Business (YoY Comparison)

2Q Fiscal 2013

2Q Fiscal 2014

4,708

5,890

1,182

0

236

236

4,708

5,654

946

Operating income (Millions of yen)

65

173

108

Guesthouses

16

18

2

1,155

1,518

363

398

379

-19

Net sales (Millions of yen)
New facilities
Existing facilities

Weddings (Couples)
Average sales per wedding(10,000 yen)

Difference

Sales increased due to strong sales at existing facilities and the opening of new facilities
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Overview of the Corporates Business (YoY Comparison)(Millions of yen)

2Q Fiscal 2013

2Q Fiscal 2014

1,887

1,875

-12

1,256

1,324

68

Sampling

499

430

-69

Others

132

121

-11

Operating income

212

178

-34

Net sales

Contracting services

Difference

Contracting services: Higher sales for existing customers
Sampling:
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Decrease in the number of major clients163. 2Q Fiscal 2014 Results Relative to Initial Plan

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Consolidated Results Compared to Initial Plan for 2Q Fiscal 2014
(Millions of yen)

2Q Fiscal 2014
(Initial plan)

2Q Fiscal 2014
(Results)% to netsales% to net
sales

Relative to initial plan
Difference

Change in %to net sales

Net sales

76,400-74,048--2,352-

Cost of sales

40,69353.3%

39,08252.8%-1,611-0.5%

Gross profit

35,706

46.7%

34,966

47.2%

-740

0.5%

SG&A expenses

34,60645.3%

33,13244.7%-1,474-0.6%

Operating income

1,100

1.4%

1,833

2.5%

733

1.1%

Ordinary income

1,400

1.8%

1,946

2.6%

546

0.8%

700

0.9%

914

1.2%

214

0.3%

Net income

Net sales declined vs. initial plan in the mail-order business and the corporates business
Operating income increased due to the improvement in the gross profit margin and the
reduction in SG&A expenses
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Consolidated Sales by Business Segment (Compared with Initial Plan)(Millions of yen)

2Q Fiscal 201414年当初第2Q-3.5％
68,406

initial plan

2Q Fiscal 201414年第2Q
results

66,042
2.6％
5,738

5,890

-8.3％
2,045 1,875

13.8％
210

Mail-order business

Bridal businessCorporates business

239

OthersMail-order business: Drop in sales after the falloff in demand following the April consumption tax
hike and lower sales in the Hanpukai business
Bridal business:
Increase in the number of weddings
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Consolidated Operating Income by Business Segment(Compared with Initial Plan)(Millions of yen)

2Q Fiscal 2014
initial plan

79.4％

2Q Fiscal 2014
results

1,464

816

-23.3％
302.3％
173

232
178
128.6％

43

Mail-order business

Bridal business7
Corporates business16

OthersMail-order business: Operating income increased due to the improvement in the gross profit
margin and the reduction in SG&A expenses
Bridal business:
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Operating income increased due to an increase in the number of weddings
and the reduction in SG&A expenses20

4. Consolidated Earnings Outlook for Fiscal 2014

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Consolidated Earnings Outlook for Fiscal 2014 (YoY Comparison)(Millions of yen)

Fiscal 2013 (Results)

Fiscal 2014 (Forecasts)% to netsales% to netsales

Net sales

141,552

Cost of sales

72,475Gross profit-

YoY change
Difference

Change in %to net sales

146,500

-

4,948

-

51.2%

77,046

52.6%

4,571

1.4%

69,07748.8%

69,453

47.4%

376

-1.4%

SG&A expenses

65,05746.0%

65,853

44.9%

796

-1.1%

Operating income

4,019

2.8%

3,600

2.5%

-419

-0.3%

Ordinary income

4,631

3.3%

4,000

2.7%

-631

-0.6%

Net income

4,046

2.9%

2,300

1.6%

-1,746-1.3%

Net sales:

Forecast higher sales in all segments, especially in the mail-order business and thebridal business
Operating income: Forecast a slight decline in operating income due to the lower SG&A-to-sales ratio,
despite the lower gross profit margin
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Consolidated Sales Outlook by Business Segment for Fiscal 2014
(YoY Comparison)(Millions of yen)

Fiscal 2013
results

2.1％
126,498 129,198

Fiscal 2014
forecasts

19.5％
12,825
10,731

1.8％
3,838 3,907

17.1％
484

Mail-order business

Bridal businessCorporates business

567

OthersMail-order business: Forecast a steady increase in Internet sales, but an ongoing decline in the Hanpukai
business
Bridal business:
Forecast a strong performance at existing facilities and the expected contribution tosecond-half sales from two new facilities opened in the first half
Others:
Forecast higher sales in service businesses, primarily insurance and credit card services
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Consolidated Earnings Outlook by Business Segment for Fiscal 2014
(YoY Comparison)(Millions of yen)

Fiscal 2013
results-13.4%

Fiscal 2014
forecasts

10.8%

2,840
2,460

701

777

-16.5%
393

328-59.0%
83

Mail-order business

Bridal businessCorporates business

34

OthersMail-order business: Forecast lower operating income mainly due to an increase in the cost-of-sales ratio
caused by the weaker yen and growth in sales of products sold at bargain prices
Bridal business:

Forecast higher operating income due to the strong performance of existing facilities andthe expected contribution to operating income from new facilities

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Topics
Launch of Hietori Biyori 365
January 2014:

Onkatsu Research Office established at the Monthly
Business Development Department

Senshukai launched the new Hietori Biyori 365 brand, a source of new ideas for“Onkatsu (staying warm)” to solve the problem of feeling cold that many women have.

September 2014: New catalog to be issued
Concept: A 365-day “warm life” both mentally and physically
The catalog will have about 40 types of original products, such as socks for staying
warm, a special steamed yellow ginger powder from southern Japan (Amami
Tokunoshima), and bath additives.

Two Egao no Mori (smile forest) Nursery School openings
September 1, 2014: Egao no Mori Nursery School Ino
to open in Sakura City, Chiba

October 1, 2014: Egao no Mori Nursery School Kamiikedai to open in Ota-ku, Tokyo

Licensed nursery school

Licensed small nursery school(Capacity: 60 children)(Capacity: 19 children)

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Senshukai's CSR Activities in 2Q Fiscal 2014
Full-scale start of the Smile Forest Project with customers
The Smile Forest project started in 2013 with the slogan “together with our customers, making
everyone smile.” Interest among customers was very strong and donations in the first half of 2014
totaled more than 14 million yen. We have used these funds to start a number of projects to support
post-quake reconstruction and protect the environment.

Post-quake reconstruction support
Blankets for newborn babies in earthquake-affected areas

Baby blankets (“Okurumi” in Japanese) with a design reflecting the nature of the Tohoku
region were created with designer Yurio Seki. With the cooperation of the General Community
Corporation J'espère, the blankets were given to babies in four prefectures of the Tohoku
region. Since 2013, more than 5,000 blankets have been given in 40 locations.

Participation in event by childcare NPO in Ishinomaki

Senshukai participated in an exhibition in June held by the Non-profit Organization Baby Smile
Ishinomaki. There was a stamp workshop by Yurio Seki, a family photo space, gifts of baby
clothes from our employees, and other activities. More than 500 families visited our exhibition
area.

Environmental activities
Renewable energy classes for elementary school students and their mothers

Japan’s Agency for Natural Resources and Energy is working with the private sector to conduct
the Green Power Project. As part of this project, we plan to hold classes at 10 elementary
schools throughout Japan with Diamond, Inc. The objective is to give parents and their children
an opportunity to think about the importance of renewable energy.
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26

Dividends and Earnings Announcements Scheduled in Fiscal 2014
Dividend forecast
Our basic policy is to consistently distribute earnings to shareholders with a consolidated payout ratioof 30% as the target.
We plan to pay a dividend of 12 yen per share for the cumulative second quarter of Fiscal 2014.
We plan to pay a year-end dividend of 12 yen, which results in an annual dividend of 24 yen per share,
the same as the dividend for 2013.

Schedule for earnings announcements
October 31, 2014 (Friday)

Announcement of financial results for the third quarter of Fiscal 2014

February 5, 2015 (Thursday) Announcement of financial results for Fiscal 2014
February 6, 2015 (Friday)

Earnings presentation for Fiscal 2014 (Tokyo)

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

Senshukai IR e-mailWe have started an IR e-mail service to supply investors and other individuals with information about
results of operations and monthly sales, press releases, and other information about our activities.
To receive these e-mails, please register for this service (currently available only in Japanese) on the
Senshukai IR website.
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27

New Benefit Program for Shareholders
Benefitprogram

１. Gift certificatesBenefitprogram

２. Special benefit for long-term
shareholders

Applicable shareholders

Applicable shareholders

Holders of 100 shares or more who are listed on Senshukai’s
Shareholder Register as of June 30 and December 31 eachyear (Twice each year)

Holders of 100 shares or more for one year or more who arelisted on Senshukai’s Shareholder Register as of December 31
each year (Once each year)

Program details

Program details

Shareholders receive gift certificates that can be used topurchase Senshukai products.

[Previous program][Previous program]
Until June 30, 2014

Until December 31, 2013
Shareholders received hospitality points based on thenumber of years they have held Senshukai stock.

Shares held

Gift certificates100-499

1,000 yen

500-999

2,500 yen

Shareholders receive gift certificates based on thenumber of years they have held Senshukai stock.

1,000 or more

5,000 yen

Years/Gift certificates[New program]Starting on December 31, 2014

Shares held

[New program]Starting on December 31, 2014

1 year ormore

2 years ormore

3 years or
more

100-299

500 yen 1,000 yen 1,500 yen

Shares held

Gift certificates300-499

1,000 yen 1,500 yen 2,000 yen

100-299

1,000 yen

500-999

1,500 yen 2,000 yen 3,000 yen

300-4992,000 yen

1,000 or more

2,000 yen 3,000 yen 4,000 yen

500-999

4,000 yen

1,000 or more

5,000 yen

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* Long-term shareholders receive these gift certificates in
addition to the gift certificates that are sent to allshareholders.

28