Senshukai Co., Ltd.
Fiscal 2013 Earnings Presentation
February 6, 2014

Contents

1． Consolidated Results of Operations for Fiscal 2013
2． Overview by Segment
3． Consolidated Earnings Outlook for Fiscal 20142

1． Consolidated Results of Operationsfor Fiscal 20133

Consolidated Statements of Income for Fiscal 2013 (YoY Comparison)(Millions of yen)

Fiscal 2012

Fiscal 2013

% to netsales% to netsales

YoY change
Difference

Percentage
points

Net sales

145,750

Cost of sales

76,39252.4%

72,47551.2%-3,917-1.2%

Gross profit

69,357

47.6%

69,077

48.8%

-280

1.2%

SG&A expenses

67,24846.2%

65,05746.0%-2,191-0.2%

Operating income

2,109

1.4%

4,019

2.8%

1,910

1.4%

Ordinary income

2,765

1.9%

4,631

3.3%

1,866

1.4%

Net income

2,029

1.4%

4,046

2.9%

2,017

1.5%

Net income per share(yen)

46.86

93.43

46.57

Return on equity

4.7%

8.5%

3.8%

141,552-4,1984Consolidated Balance Sheet for Fiscal 2013 (YoY Comparison)Dec. 31,2012

Dec. 31,2013

Difference

Current assets

46,24850,177

3,929

Noncurrent assets

46,63948,622

1,983Total assets

92,88798,8005,913

AssetsLiabilities

Remarks(Millions of yen)

Cash and deposits: -¥900mn
Merchandise and finished goods: +¥4.6bn
Property, plant and equipment: +¥600mn
Intangible assets: -¥500mn
Investments and other assets: +¥1.9bn

Electronically recorded obligations-operating: +¥6.2bn
Short-term loans payable: +¥2.9bn
Accounts payable-factoring: -¥5.4bn
Bonds payable: -¥700mn
Long-term loans payable: -¥2.1bn
Lease obligations: +¥400mn

Current liabilities

37,062

39,635

2,573

Noncurrent liabilities

10,8928,805-2,087

Total liabilities

47,95548,440485

Shareholders’ equity

52,20354,9752,772

Retained earnings: +¥2.7bn

Accumulated othercomprehensive income-7,271-4,615

2,656

Valuation difference on available-for-sale securities:+¥1.3bn
Deferred gains or losses on hedges: +¥800mn

Total net assets

44,93250,3595,427

Total liabilities
and net assets

92,88798,800

5,913

Net assets

5Consolidated Statements of Cash Flows for Fiscal 2013 (YoY Comparison)(Millions of yen)

Fiscal 2012

Net cash providedby (used in)operating activities

Net cash providedby (used in)investing activities

2,337-3,606

Fiscal 2013

2,174

-2,168Difference

Fiscal 2013 highlights-163

Income before income taxes and minority
interests: +¥3.7bn
Depreciation: +¥2.6bn
Increase in inventories: -¥4.5bn
Increase in notes and accounts payabletrade: +¥4.6bn
Decrease in other current liabilities: -¥5.5bn

1,438

Purchase of property, plant and equipment:-¥2.6bn
Proceeds from redemption of investment
securities: +¥900mn
Increase in short-term loans payable:+¥3.0bn
Repayment of long-term loans payable:-¥2.4bn
Cash dividends paid: -¥900mn

Net cash providedby (used in)financing activities

991-986-1,977

Cash and cash
equivalents at endof period

7,452

6,495-957

6

Net Sales by Consolidated Business Segment for Fiscal 2013
(YoY Comparison)(Millions of yen)

-3.0%
130,456

Fiscal 2012

Fiscal 2013

126,498+5.2%
10,197

10,731+0.1%
3,833 3,838-61.6%
1,262

Mail-orderbusiness

Bridalbusiness

Corporates
business484

OthersMail-order business: Sales of apparel and fashion accessories declined
Bridal business:
Number of weddings and average sales per wedding increased due to theopening of a new facility
Others:Sales declined due to the withdrawal from pet business7

Consolidated Sales by Product Category for Fiscal 2013 (YoY Comparison)(Millions of yen)

-2.5%
58,882

Fiscal 2012

Fiscal 2013

57,426-0.4%
32,285 32,141

-0.8%

-3.9%

-8.6%
18,283 18,144

15,240 13,929-12.3%

17,101 16,437

3,958 3,473

ApparelFashionaccessories

Interior
goods

Household
goods

Foods

OthersApparel and fashion accessories: Sales were weak overall due to unfavorable weather and other factors
Interior goods:
Strong sales of fabrics, furniture and storage products

8Trend in Monthly Consolidated Sales for Fiscal 2013
Monthly Consolidated Sales (YoY Comparison)
102.5%

102.3%

101.9%

100.2%

100.1%

YoY
100%

99.9%

99.0%

99.5%

96.7%

91.1%
89.0%

Jan.

Feb.

Mar.

Apr.

88.6%

MayJun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Sales of apparel declined at the beginning of the season (spring and autumn) due to unusually low
temperatures in April and unusually warm temperatures in October
Sales declined in December as unusually warm temperatures depressed demand for high-priced
items (knitted outer wear, boots, etc.)
In core apparel sales channels, our policies did not match trends, and the response to our sales
promotions was weaker than in the previous year
910

2． Overview by Segment

11

Sales and Earnings by Segment in Fiscal 2013 (YoY Comparison)(Millions of yen)

Mail-order businessNet sales
Operating income

Fiscal 2012

Fiscal 2013

Difference

YoY change

130,456

126,498-3,958

-3.0%

994

2,840

1,846

185.6%

10,197

10,731

534

5.2%

752

701-51-6.7%

3,833

3,838

50.1%

396393-30.8%

1,262

484-778-61.6%

-33

83116

-

Bridal businessNet sales
Operating income
Corporates businessNet sales
Operating income
Others
Net sales
Operating income

12Overview of the Mail-order Business (YoY Comparison)*Excluding the Hanpukai business

Fiscal 2012

Fiscal 2013

Difference

Annual number of active
customers (10,000 members)

409.1

403.6

-5.5

Average sales per order (Yen)

10,563

10,536

-27

2.96

2.90

-0.06

6,691

6,463-228

Number of new members(10,000 members)

91.8

90.9

-0.9

Average sales per product (Yen)

2,553

2,560

7

Annual order amount percustomer (Yen)

31,30130,592-709

Annual order frequency percustomer (Times)
Catalog circulation(10,000 volume)

Annual number of active customers: Declined
Average sales per order:
Declining trend bottomed out

13Internet-related Indicators and Policies in Fiscal 2013
(Billions of yen)
Smartphone-only Sales

Internet Sales(including mobile sales)

81.4
72.6
Sales via catalog

17.3

83.1
13.5

17.9

Sharp
increase!

18.0(Billions of yen)

7.8
Fiscal 2012

Fiscal 2013

Ratio of Internet-based Orders
Rising!

64.8%

71.1%
67.9%

Internet-onlysales

64.1

69.6

Fiscal 2011

Fiscal 2012

Fiscal 2013

54.7
Revision to review system in October 2013
Enhanced expression and communication functions
Together with synergies from policies to promote
postings, postings doubled!
Revision to search system at end-November 2013
Fiscal 2011

Fiscal 2012

Fiscal 2013

Product searches made easier

14

Differences in Cost-of-sales Ratio and SG&A Expenses in the Mail-order
Business for Fiscal 2013 (YoY Comparison)
Cost-of-sales Ratio

SG&A Expenses-1.2%-2,17961,281

52.5%

51.3%

Fiscal 2012Fiscal 2013

Increased sales of strategic products* (Hotcott, etc.)
Review of the price range (shifted from low-tierprices to mid-tier prices)Strengthened direct import procurement*Strategic products
Products with added value in terms of functionality or design

Fiscal 2012

(Millions of yen)

59,102

Fiscal 2013

Distribution-related costs:
Declined due to more efficient logistics operations[a decrease of ¥930mn]
Catalog costs:
Declined due to reduction in paper costs andcatalog circulation, and review in printed paper[a decrease of ¥920mn]

15Overview of the Bridal Business (YoY Comparison)

Fiscal 2012
Net sales (Millions of yen)

Fiscal 2013

Difference

10,197

10,731

534

Operating income (Millions of yen)

752

701

-51

Guesthouses

1516

1

Weddings (Couples)

2,594

2,632

38

Average sales per wedding(10,000 yen)

382.7

397.6

14.9

Existing guesthouses struggled due to fewer visiting customers, but this was offset by an increase in
the contract rate and average sales per wedding, and contributions from the opening of a new facility
Still, operating income declined slightly as higher sales could not make up for an increase in SG&A
expenses16

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

Fiscal 2012

Fiscal 2013

Difference

3,833

3,838

52,656

2,706

50

Sampling

785

907

122

Novelties

314

144

-170

Others78

81

3Operating income

396

393

-3

Net sales
Contracting services

Sampling: Increase in new customers
Novelties: Decrease in major clients

17

18

3. Consolidated Earnings Outlook for Fiscal 201419

Consolidated Earnings Outlook for Fiscal 2014 (YoY Comparison)(Millions of yen)
Fiscal 2013
(Results)

Fiscal 2014
(Initial forecasts)% to netsales% to netsales

YoY change
Difference

Percentage
pointsUp
6.0%

Net sales

141,552

Cost of sales

72,47551.2%

79,228

52.8%

6,753

1.6%

Gross profit

69,07748.8%

70,772

47.2%

1,695

-1.6%

SG&A expenses

65,05746.0%

67,172

44.8%

2,115

-1.2%

Operating income

4,019

2.8%

3,600

2.4%

-419

-0.4%

Ordinary income

4,631

3.3%

4,000

2.7%

-631

-0.6%

Net income

4,046

2.9%

2,300

1.5%

-1,746-1.4%

150,000

8,448

We forecast sales to rise in all segments, but profits to decline at every level because in the mailorder business, the yen’s depreciation and surging raw materials prices increase the cost-of-sales ratio,and reorganization of the logistics network temporarily increases SG&A expenses.
20

Consolidated Sales Outlook by Business Segment for Fiscal 2014
(YoY Comparison)(Millions of yen)

+5.0%
126,498

Fiscal 2013 results

Fiscal 2014 forecasts

132,800+17.4%
12,60010,731+6.8%
3,838 4,100

+3.3%
484

Mail-orderbusiness

Bridalbusiness

Corporates
business

500

OthersMail-order business: Targeting higher sales through expansion of Internet and smartphone sales
Bridal business:
Targeting higher sales through opening of new facilities and other events21Topics in Fiscal 2014 (1)Dears Brain Inc.: Kamakura Store and Kyoto Store to open in March and May 2014
(17th and 18th guesthouses)

KOTOWA Kamakura Tsurugaoka Kaikan

KOTOWA Kyoto Yasaka

Senshukai Child Care Co., Ltd.: Plan to establish a certified nursery school in Sakura City,
Chiba Prefecture in September 2014

Aims to open 5-10 certified nurseryschools in the Tokyo metropolitan area
over the next 2-3 years

Name: Egao no Mori (smile forecast)Nursery School Ino22

Topics in Fiscal 2014 (2)Minokamo Distribution Center (DC)Koshien C

January 2015: Scheduled to begin
operations

Minokamo DCKani DC
Kanuma C

Minokamo
DCWe aim to consolidate external
warehouses in the Chubu area,
improve the efficiency of logistics
operations in conjunction with theneighboring distribution center,
reduce costs, and shorten lead times

Minokamo
Gifu
Biwa Lake

Kani

Reference:

Ogaki
Ichinomiya

Kani
DCTajimi… External
warehouse

Minokamo DC: Total floor space: 46,172m2
Three stories
Kani DC:(Chubumerchandisecenter)

Total floor space: 63,490m2
Five stories

23

Senshukai's CSR Activities in Fiscal 2013
Project to bring smiles to society with customers“Smile Forest Project” contributions exceed 30 million yen

Haha to Ko Tohoku Project(Tohoku restoration support for mothersand children)

We collected donations over 30 million
yen from over 300,000 customers for our
CSR activities “Tohoku Restoration
Support,” “Pink Ribbon Campaign,” and“Environment Support.” We used thefunds to make donations to NPOs,
contribute to support of mothers andchildren in the Tohoku region, anddistribute free breast cancer screening
coupons.
Pink Ribbon Project
We conducted our own
awareness event in October –“pink ribbon” month. We raised
awareness of the importance ofbreast cancer screening by
distributing awareness magnets
and presenting free breast
cancer screening coupons.

We delivered pottedcarnations to every
temporary home in Ofunato
City, Iwate Prefecture, justas we did in the previousyear. We also presented“okurumi” (baby blankets) toeach precious child born in
the Tohoku region, andconducted events to support
childrearing salons.
24Trend and Plan for Capital Expenditures and Depreciation Expenses
Capital Expenditures(Millions of yen)

Depreciation Expenses(Millions of yen)

4,968
4,602
882

4,227
799

2,873
Intangible
assetsProperty,plant andequipment

1,546

1,326

Fiscal
2010

2,733

1,152
2,404

2,343

Fiscal
2010

Fiscal
2011

2,618

2,668

Fiscal
2013

Fiscal2014 (fct.)

3,046

2,085

3,720

3,428

3,815961
Fiscal
2011

Fiscal
2012

Fiscal
2013

Fiscal2014 (fct.)

Fiscal2012

Property, plant and equipment: New facility related costs at Dears Brain Inc. andMinokamo Distribution Center to increase in 2013 to 2014.

25Dividends and Results Announcements Scheduled in Fiscal 2014
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 accounta payout ratio while at the same time strengthening the business foundation with retained
earnings.
Based on this policy and in light of Fiscal 2013 consolidated results, Senshukai plans to pay
a total annual dividend of 24 yen per share comprised of an interim dividend of 12 yen per
share and a year-end dividend of 12 yen per share, which has been initially planned.
For Fiscal 2014, Senshukai plans an annual dividend of 24 yen per share (12 yen each atinterim and year-end), the same as in Fiscal 2013.
April 25 (Friday)

Announcement of financial results for the first quarter of Fiscal 2014

July 31 (Thursday)

Announcement of financial results for the second quarter of Fiscal 2014

August 1 (Friday)

Earnings presentation for the second quarter of Fiscal 2014 (Tokyo)

October 31 (Friday)

Announcement of financial results for the third quarter of Fiscal 2014

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

26