SENSHUKAI CO.,LTD.

(Tokyo Stock Exchange, First Section: 8165)

Fiscal 2014 Earnings Presentation(January 1 - December 31, 2014)

February 5, 2015

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Contents

1. About Senshukai
2. Consolidated Results of Operations for Fiscal 2014
3. Overview by Segment
4. Consolidated Earnings Outlook for Fiscal 2015
5. Medium- to Long-term Management Plan
6. Others

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1. About Senshukai

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Corporate Profile
Women's Smiles Company

To become the “one and only” choice
for women
Senshukai wants to remain a company, that is the “one and only”
choice for women. We accomplish this by offering original and oneof-a-kind products that women want along with safe, convenient
and thorough services that customers can use with confidence.

Women customers are 92% of annual
active customers of 3.84 million

Age Composition of Customers
Under
20s

30s

40s

Over
50s

Pct. of women customers

92%

About
70%
2010

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2011

2012

2013

2014
4

Business Profile
As a “Women's Smiles Company,” Senshukai provides awide range of merchandise and services that cover avariety of activities and stages of women's lives.
Bridal Business

Mail-order Business
Senshukai’s core business・Catalog business
・Hanpukai business

For women in their
20s to 50s
Ideas for a lifestylethat is “a little better”

OthersChildcare businessInsurance and credit card services

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House wedding business18 wedding halls, mostly innorthern Kanto and Kyushu

Corporates Business

A variety of services to support
the operations of client companies

5Consolidated Net Sales and Operating Income (Recent Five Years)
Net Sales(Millions of yen)
145,750

136,859

137,261

2010

2011

2012

141,552

142,526

2013

2014

Operating Income
3,422(Millions of yen)
4,019
3,107

3,088
2,109

2010
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2011

2012

2013

2014
6

2. Consolidated Results of Operations
for Fiscal 2014

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

2014

2013
% to netsales

YoY change% to net
sales

Difference

Changein % to net
sales

Net sales

141,552

Cost of sales

72,47551.2%

75,038

52.6%

2,563

1.4%

Gross profit

69,07748.8%

67,48847.4%-1,589-1.4%

SG&A expenses

65,05746.0%

64,399

45.2%

-658

-0.8%

Operating income

4,019

2.8%

3,088

2.2%

-931

-0.6%

Ordinary income

4,631

3.3%

3,549

2.5%

-1,082-0.8%

Net income
Net income per share(yen)
Return on equity

4,046

2.9%

1,798

1.3%

-2,248-1.6%

142,526

974

93.43

41.52

-51.91

8.5%

3.5%

-5.0%

Net sales rose 0.7% year on year due to the strong performance of the bridal business despite theslight decline in the mail-order business following the April 2014 consumption tax hikeOperating income declined 23.2% year on year due to the decline in the gross profit margin resulting
from the yen’s depreciation and an increase in loss on valuation of goods
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Fiscal 2014 Consolidated Balance Sheet (YoY Comparison)(Millions of yen)Dec. 31, 2013

Dec. 31, 2014

Difference

Remarks

Current assets

50,17753,554

3,377■Cash and deposits:+¥1.4bn■Forward exchange contracts:+¥2.2bn

Non-current assets

48,622

47,231-1,391■Investment securities:-¥1.3bn

Total assets

98,800100,785

1,985+¥5.9bn-¥3.6bn-¥7.5bn

AssetsLiabilities
Current liabilities

39,63533,470-6,165■Electronically recorded
obligations-operating:■Short-term loans payable:■Others:

Non-current liabilities

8,805

14,153

5,348■Bonds with subscription
rights to shares:■Long-term loans payable:+¥7.0bn-¥1.3bn

Total liabilities

48,44047,624-816

54,97555,707732■Retained earnings:+¥0.7bn

Net assets
Shareholders’ equity
Accumulated othercomprehensive income-4,615-2,546

2,069

Total net assets

50,35953,1602,801

98,800100,785

1,985

Total liabilities and net assets
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■Valuation difference on
available-for-sale securities: +¥0.4bn■Deferred gains or losses
on hedges:+¥1.5bn9

Fiscal 2014 Consolidated Statement of Cash Flows(YoY Comparison)(Millions of yen)
2013

Net cash provided by(used in) operating
activities

Net cash provided by(used in) investing
activities

2,174-2,168

2014

2,722

-1,540Difference548■ Income before income taxes andminority interests:+¥2.9bn■ Depreciation:+¥2.6bn■ Increase in notes and accounts
payable-trade:+¥4.5bn■ Decrease in other current liabilities: -¥8.2bn

628■ Purchase of property, plant and equipment:-¥1.7bn■ Proceeds from sales of investment
securities:+¥0.9bn■ Net decrease in short-term loans payable:-¥4.1bn■ Repayment of long-term loans payable:-¥2.5bn■ Proceeds from issuance of bonds with
subscription rights to shares:+¥6.9bn

Net cash provided by(used in) financing
activities

-986

-91

895

Cash and cash
equivalents at end of
period

6,495

7,910

1,415

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2014 highlights

10

Fiscal 2014 Consolidated Sales by Business Segment(YoY Comparison)(Millions of yen)
2013
2013年度-1.0%
126,498

125,296

18.8%

2014
2014年度Increased due to the opening of new
facilities and strong sales at existing facilities

12,75010,731

2.8%
3,838

3,944

10.4%
484

Mail-order
通販business

Bridalbusiness
ブライダル

Corporates
法人business

534

Othersその他

Declined due to the slowdown in spending
after the consumption tax hike
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Fiscal 2014 Consolidated Operating Income by Business Segment(YoY Comparison)(Millions of yen)
2013
2013年度-32.4%

2014
2014年度2,840
Declined due to an increase in cost-ofsales ratio caused by the weaker yen

1,921

18.9%
701

834

Increased due to an increase in sales-22.7%
393-68.9%
304
83

Mail-order
通販business

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Bridalbusiness
ブライダル

Corporates
法人business26
Othersその他

12

3. Overview by Segment

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Overview of the Mail-order Business (YoY Comparison)

2013

2014

Difference

Net sales(Millions of yen)

126,498

125,296-1,202

Operating income(Millions of yen)

2,840

1,921

-919

Annual number of active
customers (10,000 members)

403.6

383.9

-19.7

Annual number of new members(10,000 members)

90.9

85.1

-5.8

Average sales per order (Yen)

10,536

10,61680

Annual order frequency per
customer (Times)

2.90

2.92

0.02

Catalog circulation(10,000 volume)

6,463

6,375

-88

Major components

Number of current andnew members decreased
due to a decline in TV
commercials
Average sales per orderand order frequency per
customer increased
despite a decrease in thenumber of active
customers* All figures other than net sales and operating income are non-consolidated data for the
mail-order business (excluding the Hanpukai business).
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Mail-order Business –Monthly Sales (YoY Comparison)
Mail-order Business –Monthly Sales
January to December:
99.0%

122.3%March:
Much higher because of
the rush demand to makepurchases prior to the April
consumption tax hike105.2%

104.0%
YoY
100%

100.1%
99.1%

1月
Jan.

98.2%

97.5%

2月
Feb.

94.7% 95.0%

3月
Mar.

4月
Apr.

5月
May

93.6% 91.0%
6月
Jun.

April-July:
Sharp drop following theconsumption tax hike
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7月
Jul.

89.2%
8月
Aug.

9月
Sep.

10月
Oct. 11月
Nov. 12月
Dec.

November:Slow sales of winter products
because of unusually warm weather
15

Mail-order Business –Sales by Product Category (YoY Comparison)(Millions of yen)
2013年度
20132014年度
2014-1.7%
57,426

The prolonged impact of theconsumption tax hike

56,468-2.7%
32,141 31,262

-1.4%

-7.8%

18,144 16,725

13,929 13,739

62.3%
3,473

衣料品
Apparel

服飾雑貨
Fashionaccessories

インテリア
Interior
goods

生活雑貨
Household
goods

5,638

食品
Foods

5.7%
1,382 1,461
その他
OthersAdditional sales from functional
food products
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Mail-order Business –Differences in Cost-of-sales Ratioand SG&A Expenses (YoY Comparison)
Cost-of-sales Ratio

SG&A Expenses

1.７%(Millions of yen)

-1,659

51.6%

53.3%

59,06857,4092013年度
20132014
2014年度

2013年度
20132014
2014年度The cost-of-sales ratio increased due tothe weaker yen(For merchandise purchased from trading companies
and manufacturers and direct purchases)

The valuation losses on goods increased
due to higher inventories
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Distribution costs:
Packing expenses declined due to a higher
average unit price of shipments
Sales promotion expenses:
Catalog circulation and cross-media advertisingexpenses declined
17Mail-order Business –Internet-related Indicators(Billions of yen)Internet Sales

Ratio of Internet-based Orders(including mobile sales)

81.4
Sales via
catalog

17.3

83.1

83.1

13.5

10.8

71.1%

3.4%

2014
2014年度

2013
2013年度Internetonly sales

64.1

69.6

72.3

Amount and Share of Smartphone Sales
Net sales（Billions of yen)

2012
2012年度

2013
2013年度

2014
2014年度18.0

Share of
sales

21.7%
Sales via catalog: Customer uses Internet to enter catalog product number（Internet-only sales）
Internet-only sales: All Internet sales other than sales via catalog
Optimizing sales areas to match device capabilities,
such as by enabling smartphone users to view
additional product information and checkmerchandise inventories

8.4

10.1%

26.4

31.8%
2014
2014年度

2013
2013年度

Share of Website Visits by Smartphone Users(number of sessions)Use a campaign management system* todistribute e-mail with the ideal timing in relation
to the level of interest among customers* Campaign management system:
Automatically plans, executes and operates marketing campaigns by using thecentralized management of data involving customers and their purchases, e-mailmessages sent, responses to past campaigns and other items
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74.5%

35.3%

2013
2013年度

11.4%

46.7%

2014
2014年度18

Overview of the Bridal Business (YoY Comparison)

2013

2014

Difference

Net sales(Millions of yen)

10,731

12,7502,019

New facilities

-

749

749

Opening of new facilities
in Kamakura and Kyoto

10,731

12,001

1,270

Strong sales due in partto renovations

Operating income(Millions of yen)

701

834

133

Guesthouses

16

18

2

Weddings (Couples)

2,632

3,260

628

Average sales per wedding(10,000 yen)

397.6

381.7

-15.9

Existing facilities

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Major components

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

Net sales

Contracting services

2013

2014

Difference

3,838

3,944

106

2,706

2,857

151

Increase in contracting
sales of major clients
Decrease in thenumber of existingclients

Sampling

907

801

-106

Novelties

144

225

81

Others

81

61

-20

393

304

-89

Operating income

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Major components

Increase in the numberof new clients204. Consolidated Earnings Outlook
for Fiscal 2015

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Fiscal 2015 Consolidated Earnings Outlook (YoY Comparison)(Millions of yen)2014 (Results)

2015 (Forecasts)% to netsales% to netsales

YoY change
Difference

Change in %to net sales

Net sales

142,526

Cost of sales

75,03852.6%

76,715

52.5%

1,677

-0.1%

Gross profit

67,48847.4%

69,284

47.5%

1,796

0.1%

SG&A expenses

64,39945.2%

66,084

45.3%

1,685

0.1%

Operating income

3,088

2.2%

3,200

2.2%

112

0.0%

Ordinary income

3,549

2.5%

3,500

2.4%

-49

-0.1%

Net income

1,798

1.3%

2,000

1.4%

202

0.1%

146,000

3,474

Net sales: Forecast higher sales for the mail-order business due to the planned renewal of catalog andthe launch of catalog targeting new customer segments; forecast higher sales for the bridal
business because of expected growth in sales at new and existing facilities, just as in 2014
Operating income: Forecast higher operating income due to outlook for cost-of-sales and SG&A expense
ratios about the same as in 2014 despite the negative effects of the weaker yen,etc.
22
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Fiscal 2015 Consolidated Sales Outlook by Business Segment(YoY Comparison)(Millions of yen)

1.3%
125,296 126,900

2014 results
2014年度実績

2015 forecasts
2015年度予想

9.8%

12,75014,0006.5%
3,944 4,200

68.5%
534

Mail-order
通販business

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Bridalbusiness
ブライダル

Corporates
法人business

900

Othersその他

23

Fiscal 2015 Consolidated Operating Income Outlook
by Business Segment (YoY Comparison)(Millions of yen)2014 results
2014年度実績

-2.1%
1,921

1,881

2015 forecasts
2015年度予想

Expect operating income
to decline due to higher
costs at Minokamo DC

9.6%
834

914

0.0%
280.8%
304

304
26

Mail-order
通販business

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Bridalbusiness
ブライダル

Corporates
法人business

99

Othersその他

24

Trend and Plan for Capital Expenditures and Depreciation Expenses
Capital Expenditures(Millions of yen)

(Millions of yen)

4,727

4,602
882

Depreciation Expenses

4,227

884

799
3,046

2,733
3,045

2,893
2,618

2,675

2013

2014

2,343

884
Intangible
assets

2,085

3,720

3,843

3,428
2,161

Property,plant andequipment

961
2011

2012

2013

2014

2015 (fct.)

2011

2012

2015 (fct.)

Property, plant and equipment: Expect costs related to the establishment of Minokamo Distribution
Center and new facilities at Dears Brain Inc. to increase in Fiscal 2015
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5. Medium- to Long-term Management Plan
(Fiscal 2014 to Fiscal 2018)

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Medium- to Long-term Management Plan
“Innovate for Smiles 2018”
Senshukai Group Targets (Fiscal 2014 to Fiscal 2018)
Medium- to Long-term Management Targets(Consolidated)

Targets by Business Segment(Billions of yen)2013 results(Millions of yen)
2013
results

Net sales(% to net sales)

OperatingincomeNet income

Return on
equity141,552

2018
targets(100.0%)

4,019

10,0004,046(2.8%)(5.3%)

18.0

126.4
7.4

1.8

10.7
0.7

3
Net sales

Operating income

Corporates BusinessNet sales

Operating income

New Businesses
45

60

6,500

(3.5%)

Bridal Business

158.5

187,000(100.0%)(2.8%)

Mail-order Business2018 targets

38
0.7

8.5%

10.0%

0.3
Net sales

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Operating income

1
Net sales

Operating income27Medium- to Long-term Management Plan
“Innovate for Smiles 2018”
Mail-order BusinessCore Strategy 1: “Customer Strategy”
Clearly define targeted customer segmentsCore Strategy 2: “Merchandising Strategy” Differentiate ourselves by selling self-developed original products withadded valueCore Strategy 3: “Sales Channel Strategy” Use an omni-channel approach to give customers more opportunities
to purchase our productsCore Strategy 4: “Fulfillment Strategy”
Invest in logistics and IT systems to improve efficiency

Scheduled launch: May 2015

Core fashion catalog“BELLE MAISON fashion”
First-year initiatives and plan for 2015

Catalog targeting womenin their 50s“Vialamo”

 Increase the use of private brands created to target specific customer segments Launch “BELLE MAISON fashion 2015 Spring” as the core fashion catalog
A catalog focused on merchandise containing very carefully selected original items
 Continue progress with differentiating by developing original products with added value Production of merchandise that targets customers in their 30s and 50s
Will issue “rirune” in March and “Vialamo” in May and link these catalogs with e-commerce Build season-based merchandising just as at stores, rather than merchandise based on catalog, withemphasis on the self-developed original products
 Reorganize logistics operations in the Chubu area
 Start operations at the Minokamo Distribution Center; preparations under way for start-up in 2015
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Medium- to Long-term Management Plan
“Innovate for Smiles 2018”
Bridal BusinessTo sustain sales growth, we will continue to open new wedding halls and renovate
existing ones in both urban and suburban styles.

Scheduled opening: March 2015

Niigata

FORTUNE IN THE TERRACE
Scheduled opening: July 2015
Nara

KOTOWA Nara Park Premium View

First-year initiatives and plan for 2015

 Goal is 26 wedding halls by the end of 2018; there were 18 at the end of 2014
 Plan for new wedding halls
Two in 2015 (Niigata in March and Nara in July), and two each in 2016 and 2017

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Medium- to Long-term Management Plan
“Innovate for Smiles 2018”
New Businesses
We keep developing unique businesses to fulfill women customers' needs.
1. Put priority on developing new businesses likely to generate meaningful synergies withexisting businesses due to high compatibility.
2. Cultivate peripheral businesses to complement those new businesses that we develop.

Opened in Sep. 2014

Egao no Mori
Nursery SchoolIno

To be opened in Apr. 2015

Egao no Mori
Nursery School
Kamata-ekimae

Opened in Oct. 2014

To be opened in Apr. 2015

Egao no Mori
Nursery School
Kamiikedai

Egao no Mori Nursery
School Omori-ekimaeFirst-year initiatives and plan for 2015

 Childcare businessEgao no Mori Nursery School Ino was opened in Sakura City, Chiba in September 2014
Egao no Mori Nursery School Kamiikedai was opened in Ota-ku, Tokyo in October 2014
Plan to open two nursery schools in Ota-ku, Tokyo (Kamata and Omori) in April 2015
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6. Others

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Senshukai's CSR Activities in Fiscal 2014
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 totaled more than
70 million yen until 2014. We have used these funds to the number of projects to support
post-quake reconstruction, “Pink Ribbon Campaign” and environmental activities.

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 9,000 blankets have been given in 40 locations.

Pink Ribbon Campaign
Distribution of free breast cancer screening coupons as part ofpromotion activities
Distributed 3,100 coupons in collaboration with Japan Cancer Society

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 have held classes at sevenelementary 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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32

Dividend Forecast and Earnings Announcements
Scheduled in Fiscal 2015
Dividend Forecast
Senshukai’s basic policy regarding dividends is to appropriately return profits to shareholders
that reflects its business performance by maintaining stable dividends that take into account apayout ratio while at the same time strengthening the business foundation with retained
earnings.
Based on this policy and in light of Fiscal 2014 consolidated results, Senshukai plans to pay a
year-end dividend of 12 yen per share, which has been initially planned, and together with aninterim dividend of 12 yen, this will result in a total annual dividend of 24 yen per share.
For Fiscal 2015, Senshukai plans an annual dividend of 16 yen per share (8 yen each at interim
and year-end), based on the earnings forecast.

Schedule for Earnings Announcements
April 24, 2015 (Friday)

Announcement of financial results for the first quarter of Fiscal 2015

July 30, 2015 (Thursday)

Announcement of financial results for the second quarter of Fiscal 2015

July 31, 2015 (Friday)

Earnings presentation for the second quarter of Fiscal 2015 (Tokyo)

October 30, 2015 (Friday) Announcement of financial results for the third quarter of Fiscal 2015

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.

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33