Senshukai Co., Ltd.
Second Quarter of Fiscal 2010
Earnings Presentation
July 29, 2010

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Copyright SENSHUKAI Co.,Ltd. All Rights Reserved.

Contents. Results of Operations for 2Q Fiscal 2010
. Results Compared to Initial Targets for 2Q Fiscal 2010
. Consolidated Earnings Forecasts for Fiscal 2010
. Reference Materials and Others2

2Q Fiscal 2010 Consolidated Results Highlights

Results of Operations for 2Q Fiscal 2010

(Millions of yen)

Net Sales

Net Sales¥69.62bn ( -8.8%)

Operating Income¥2.05bn (Net Income¥1.45bn (+98.0%)-80,000)

Operating Income

69,6292,057
60,000

Sales declined, despite a recovery in unit orders,
due to a decline in average sales per customer

2,000

3,000

76,308Net Income

40,000

1,451

2,000

1,000

1,000733

Operating income improved significantly,
moving into the black, due to a decline invaluation losses and cuts to SG&A expenses
Net income increased despite a decline inforeign exchange gains and the emergenceof loss on valuation of compound financial
instruments* "2Q" refers to the cumulative period up through the second quarter:
January 1, 2010 to June 30, 2010

20,0000-47402Q2QFiscal 2009 Fiscal 2010

-1,000

2Q
2Q
Fiscal 2009 Fiscal 2010

02Q
2Q
Fiscal 2009 Fiscal 2010
3Consolidated Results of Operations for 2Q Fiscal 2010 Results of Operations for 2Q Fiscal 2010
(YoY Comparison)(Millions of yen)

2Q Fiscal 2009

2Q Fiscal 2010

% to Net
Sales% to NetSales

YoY change
Difference%

Net Sales

76,308-69,629--6,679-8.8%

Cost of Sales

40,51053.1%

35,15250.5%-5,358-13.2%

Gross Profit

35,79746.9%

34,47649.5%-1,321-3.7%

SG&A Expenses

36,27247.5%

32,41946.6%-3,853-10.6%

Operating Income

-474

-0.6%

2,057

3.0%

2,531-

Ordinary Income

1,064

1.4%

2,010

2.9%

946

88.8%

733

1.0%

1,451

2.1%

718

98.0%

Net Income4Consolidated Balance Sheets for 2Q Fiscal 2010
Dec. 31, 2009

Jun. 30, 2010

Difference

Current assets

42,11737,964-4,153

Noncurrent assets

49,72048,241-1,479Total assets

91,837

86,205-5,632

AssetsResults of Operations for 2Q Fiscal 2010

Remarks(Millions of yen)

Inventories: decreased due to reduction of product inventories
Notes and accounts receivable-trade, accounts receivable-other:decreased due to falling sales
Property, plant and equipment: decreased due to depreciation,
sale, etc.
Investment securities: decreased due to falling share prices

Liabilities
Current liabilities

41,32135,921-5,400Notes and accounts payable-trade: decreased due to lower
purchases
Short-term loans payable: decreased due to repayments
Accounts payable-other: decreased due to fewer expenses, etc.

Noncurrent liabilities

12,60911,001-1,608

Bonds payable, long-term loans payable: decreased due torepaymentsTotal liabilities

53,93046,922-7,008

Shareholders’ equity

48,14049,6381,498

Retained earnings: increased due to booking of net income

Valuation andtranslation adjustments-10,247-10,382-135

-1426

12-

Total net assets

37,90639,282

1,376

Total liabilities and net assets

91,837

86,205-5,632

Net assets

Minority interests

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Net Sales by Business Segment for 2Q Fiscal 2010
(YoY Comparison)

Results of Operations for 2Q Fiscal 2010

(Millions of yen)

2Q Fiscal 2009

2Q Fiscal 2010

-8.8%

76,308-10.6%

69,62962,75856,137+8.4%-12.8%

7,911 8,576

5,637 4,914

Hanpukai Business

Catalog Business

Other Businesses

Consolidated
6Current Situation of Catalog BusinessResults of Operations for 2Q Fiscal 2010

2Q
Fiscal 2009

2Q
Fiscal 2010

Difference

Net sales(Millions of yen)

62,75856,137-6,621

Number of orders( 10,000 orders)

543.3

547.3

+4.0

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

260.0

259.9

-0.1

Average sales per
customer (Yen)

12,58011,386-1,194Semi-annual orderfrequency per
customer (Times)

2.09

2.11

+0.02

Catalog circulation(10,000 volume)

5,054

4,201-853

Average sales per customer
declined

Average price of listed products
declined
Declined due to increased percentage
of Internet orders

Declined due to online shift andmore efficient catalog distribution

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Current Situation of Hanpukai BusinessResults of Operations for 2Q Fiscal 2010

2Q
Fiscal 2009

2Q
Fiscal 2010

Difference

Net sales(Millions of yen)

5,637

4,914-723

Number of groups(10,000 groups)

7.2

6.5

-0.7

Number of group members(10,000 members)

24.4

21.7

-2.7

Number of individualmembers(10,000 members)

14.4

12.3

-2.1

Shortfall in number of newgroups captured to offset
monthly cancellations
Decline in members due toshortfall in members captured
in large campaigns**Large campaigns: Plus One Campaign (February)
Mohitorisama Campaign (May)8Current Situation of Other Businesses

Results of Operations for 2Q Fiscal 2010

(Millions of yen)

2Q
Fiscal 2009

2Q
Fiscal 2010

Difference

B-to-B operations

2,856

3,545+689

Increase in contract sales

Storefront business(excluding outlet)

416

438

+22

Opening of new Kurasu Fuku
stores (total: 11 stores)

Pet First Co., Ltd.

754712-42

Dears Brain Inc.

3,275

3,522+247

Others607

356-251

Total

7,911

8,576+665

Net sales

Increase in weddings
Sendai branch opened*Dears Brain: subsidiary operates the wedding business
9Breakdown of Cost-of-Sales Ratio andSG&A Expenses
Cost-of-sales Ratio
53.1%

2Q Fiscal 2009

Results of Operations for 2Q Fiscal 2010

SG&A Expenses
36,272-2.6(Millions of yen)

-3,85332,41950.5%

2Q Fiscal 2010

Purchasing cost ratio rises due to increase in bargain andclearance sales
Valuation losses decreased about ¥2.5bn YoY
Result of drop out of increase from change in inventory asset
valuation method, and fewer bargain sales due to a decline ininventory

2Q Fiscal 2009

2Q Fiscal 2010

Lower catalog-related expenses due to decreasein catalog circulation and the number of pages
Decline due to personnel expense cuts
Decline in leasing and rent expenses from storage
inventory cuts
Decline in order expenses due to increase in ratio
of internet orders
Cuts to various expenses-2,062-226-208-327-1,03010Compared toResults Compared to Initial Targets for 2Q Fiscal 2010 InitialResults
Targets for 2Q Fiscal 2010

(Millions of yen)

2Q Fiscal 2010
Initial Targets

2Q Fiscal 2010Results% to Net
Sales% to Net
Sales

Comparison toInitial Targets
Difference%

Net sales

71,500-69,629--1,871-2.6%

Cost of sales

37,03751.8%

35,15250.5%-1,885-5.1%

Gross profit

34,46248.2%

34,47649.5%

140.0%

SG&A expenses

33,71247.1%

32,41946.6%-1,293-3.8%

Operating income

750

1.0%

2,057

3.0%

1,307

174.3%

Ordinary income9501.3%

2,010

2.9%

1,060

111.6%Net income

730

1.0%

1,451

2.1%

721

98.8%
11Breakdown of Cost-of-Sales Ratio andSG&A Expenses
Cost-of-sales Ratio
51.8%

2Q Fiscal 2010
Initial Targets

Results Compared toInitial Targets for 2Q Fiscal 2010

SG&A Expenses
33,712-1.3(Millions of yen)

-1,29350.5%

2Q Fiscal 2010
Results

Increase in purchasing cost ratio in line withhigher bargain sales
Decrease in cost-of-sales ratio due to decline invaluation losses

2Q Fiscal 2010
Initial Targets

32,4192Q Fiscal 2010Results

Decline in sales promotion expenses due to shift insales promotion measures to 2H
Decline in catalog-related expenses due to decreasein catalog circulation and average paper costs
Decline in personnel expenses due to decrease in
overtime and in subsidiary employees
Cuts to various expenses-403-217-147-52612

Consolidated Earnings Forecasts for Fiscal 2010

Consolidated Earnings Forecasts(Millions of yen)

Fiscal 2009

Fiscal 2010

% to Net Sales

YoY change% to Net Sales

Difference%Net sales

147,292-139,400--7,892-5.4%Cost of sales

78,927

53.6%

71,091

51.0%-7,836-9.9%

Gross profit

68,36446.4%

68,308

49.0%

-56

-0.1%

SG&A expenses

70,77048.0%

65,60847.1%-5,162-7.3%

Operating income-2,405

-1.6%

2,700

1.9%

5,105

-

Ordinary income-1,410

-1.0%

2,750

2.0%

4,160

-

Net income-3,811

-2.6%

2,050

1.5%

5,861

-

We have lowered our sales forecast by 5.4% to 139,400 million yen in light of 2Q results and recent trends.
We lower our initial operating income forecast for 2H as a focus on product supply is expected to cause an increaseover 1H of valuation losses and the cost-of-sales ratio, and because sales promotion measures to capture newcustomers up through Fiscal 2011 will cause an increase in SG&A expenses. Still, we raise our initial full-year
forecast to 2,700 million yen.

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Highlights from Second Half of Fiscal 2010

Launch of new catalog forcustomers in their 50s!

Consolidated Earnings Forecasts

Promotional test to encourage a revival ofpast buyers towards next fiscal year!

Launch a comprehensive catalog thatcombines various catalogs
Medium targeting "around 50"

Media mix promotion in limited areas (TVcommercials, radio commercials, newspaper inserts)

Scheduled launch is September; targetedcirculation 1 million units

Scheduled launch, including sending the medium,from September

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Projected Net Sales by Business Segment
for Fiscal 2010

Consolidated Earnings Forecasts(Millions of yen)

Fiscal 2009

Fiscal 2010 Forecast-5.4%

147,292
139,400-6.5%

119,610
111,883+8.8%-14.2%

16,325 17,767

11,357 9,749

Hanpukai Business

Catalog Business

Other Businesses

Consolidated15

2Q Fiscal 2010Internet Sales, and Number of Stores and Sales
Internet Sales

Reference Materials and Others

Number of Stores and Sales(Millions of yen)

(Millions of yen)Via catalog(Number of stores)

Store sales

Internet only

Number of stores

3,000

40

80,00067,130 67,800

2960,000-4.5%

40,00034,787

26,036 23,900

2727

26

2,000
20

33,2152,460
13,719 11,519

2,360

1,000

41,094 43,900

20,00010

1,200
21,068 21,696

1,130002Q Fiscal 2009
results

302Q Fiscal 2010 Fiscal 2009
results
results

Fiscal 2010
targets

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

02Q Fiscal 2009
results

2Q Fiscal 2010 Fiscal 2009
results
results

Fiscal 2010
targets

Via catalog:

Currently examining future store openings of Kurasu Fuku

162Q Fiscal 2010 SCM Indices

Reference Materials and Others

2Q Fiscal 2009
Results
Reduction in distributionReduction
indistributionrelated variablevariable cost
cost
related

Rapid delivery ratio

Degree ofImprovement

2Q Fiscal 2010
Results

85.9%

76.2%
Deterioration

Delivery-to-order ratio

126.8%

144.1%

Import ratio

70.2%

71.2%
Slight increase

Reduction in cost-ofcost-ofReduction
insales ratio
ratiosales

Direct transaction ratio

19.4%

19.7%

Inventory turnover

4.2 times

4.8 times
Improvement

Inventories (catalog products)¥14.8 billion¥9.2 billion* 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 June17Dividend and Date of Earnings Announcements
for Fiscal 2010

Reference Materials and Others

Senshukai has consistently maintained a dividend payout ratio of 30% as part of its
shareholder return policy.
Taking into account 2Q results and revised estimates for fiscal 2010, as well as future businessdevelopments and our dividend policy of returning profits to shareholders, the Company plans 2Q
dividend of 6 yen per share and year-end dividend of 6 yen per share, for a total annual dividend of
12 yen. This is basically in line with the Company’s initial plan.
Date of earnings announcements for Fiscal 2010
Earnings for third quarter of Fiscal 2010
Earnings for Fiscal 2010
Presentation for earnings for Fiscal 2010

October 29 (Friday)
February 3, 2011 (Thursday)
February 4, 2011 (Friday)

The forward-looking statements contained in this earnings presentation are based on informationthat was available at the time. These forward-looking statements are subject to factors such asassumptions and risks that are known to exist or that may occur in the future.
Any of these factors that are subject to change, or other risk factors could cause the actual results
and operating performance to be significantly different to the forecasts presented here.

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