Summary of Financial Results for the First Quarter of Fiscal Year 2019
(Three Months Ended March 31, 2019)[Japanese GAAP]
April 25, 2019

Company name: SENSHUKAI CO.,LTD.

Stock exchange: Tokyo Stock Exchange, First Section
Stock code:
8165
URL: https://www.senshukai.co.jp
Representative:
Mr. Kenji Kajiwara, President and Representative Director
Inquiries:
Mr. Tetsuya Takahashi, General Manager, Corporates Headquarters
Tel: +81-6-6881-3220
Scheduled date of filing of Quarterly Report: May 14, 2019
Scheduled date of payment of dividend: Preparation of supplementary materials for quarterly financial results: None
Holding of quarterly financial results meeting: None
(All amounts are rounded down to the nearest millions of yen)

1. Consolidated Financial Results for the 1st Quarter of 2019 (January 1, 2019 – March 31, 2019)(1) Consolidated operating results (cumulative)(Percentages represent changes from the same period of the previous fiscal year)
Profit attributable toOperating profit
Ordinary profit
owners of parent

Net sales

Millions of yen%

1Q 2019
20,952 (21.4)(395)
1Q 2018
26,673(8.0)(1,454)
Note: Comprehensive income (millions of yen) 1Q 2019: 6,561 (-%)

Millions of yen%-

Net income per share
1Q 2019
1Q 2018

Millions of yen%

Millions of yen

%

6,974
(1,565)-141(1,393)
1Q 2018: (1,975) (-%)

Diluted net income per share

Yen

Yen

173.55(30.09)121.87-(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Equity ratio

Millions of yen

1Q 2019
75,984
Fiscal Year 201875,949Reference: Shareholders’ equity (millions of yen) 1Q 2019: 41,254

41,25434,853

Net assets per share
%

Yen

54.3
45.8
Fiscal Year 2018: 34,768

851.08689.05

2. Dividends
1Q-endDividend per share
3Q-end2Q-endYen

Yen

Year-end

Yen

Total
Yen

Fiscal Year 2018
0.00
0.00
Fiscal Year 2019
Fiscal Year 2019 (forecasts)
0.00
Notes: 1. Revision to the most recently announced dividend forecast: None
2. Dividend forecast for the Fiscal Year 2019 has not been determined at this time.
3. The dividend figures above show dividends for common shares. Please refer to “Dividends of classified stock”(after-mentioned) for information on dividends for shares whose rights are different from those of the Senshukaicommon shares.

Yen

0.00
-

3. Consolidated Outlook for Fiscal Year 2019 (January 1, 2019 – December 31, 2019)(Percentages represent changes from the same period of the previous fiscal year)
Profit attributable to Net income per
Operating profit
Ordinary profit
owners of parent
share

Net sales
Millions of yen%

Millions of yen %Millions of yen %Millions of yen %YenFull Year 2019
94,000 (17.1)(700) (1,100) 5,400 134.36
Note: Revision to the most recently announced consolidated outlook: Yes
For more information, please refer to “Notice of Revisions to Consolidated Outlook” (Japanese version only) that wasannounced today (April 25, 2019).

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): None
(2) Application of special accounting methods for presenting quarterly consolidated financial statements: Yes
Note: Please refer to “2. Quarterly Consolidated Financial Statements and Notes, ( 3) Notes to Quarterly Consolidated
Financial Statements (Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial
Statements)” on page 8 for further information.

(3) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others: None
2) Changes in accounting policies other than 1) above: None
3) Changes in accounting-based estimates: None
4) Restatements: None

(4) Number of shares outstanding (common shares)
1) Number of shares outstanding at the end of the period (including treasury shares)
1Q 2019:

52,230,393 sharesFiscal Year 2018:

52,230,393 sharesFiscal Year 2018:12,040,107 shares

1Q 2018:

52,028,735 shares

2) Number of treasury shares at the end of the period
1Q 2019:

12,040,107 shares

3) Average number of shares outstanding during the period
1Q 2019:

40,190,286 shares

Note: The Senshukai shares held by the trust that are recorded as treasury shares under shareholders’ equity is included in
the number of treasury shares, and is deducted from the number of shares that is used to calculate the average
number of shares outstanding.
* This quarterly financial report is not subject to quarterly review by certified public accountants or auditing firms.
* Cautionary statement with respect to forward-looking statements
The above projections are based on information available at the time of release of this report. Actual results could differ
significantly from these projections due to a variety of factors. For further details regarding the projections, please refer to page3, “1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecasts
and Other Forward-looking Statements.”(Reference) Dividends of classified stock
Breakdown of dividend per share for classified stock whose rights are different from those of common shares areshown below.
Class A preferred stock

1Q-endDividend per share
3Q-end2Q-endYen

Yen

Fiscal Year 201815,178,083.00
Fiscal Year 2019
Fiscal Year 2019 (forecasts)
20,000,000.00
Note: Five shares of the Class A preferred stock were issued on March 30, 2018.

Class B preferred stock

1Q-endYen

Yen

Fiscal Year 2018
Fiscal Year 2019
Fiscal Year 2019 (forecasts)
Note: Nine shares of Class B preferred stock were issued on March 30, 2018.

Total
Yen

Yen

-

15,178,083.00

30,356,166.00-

20,000,000.00

40,000,000.00

Dividend per share
3Q-end2Q-endYear-end

Yen

Year-end

Total

Yen

Yen

Yen

-

-

-

-

-

-

(Reference) Breakdown of dividends paid from the capital surplus
Of the dividends for the fiscal year 2018, breakdown of dividends paid from the capital surplus are shown below.
Record date2Q-endDividend per share (Yen)
15,178,083.00
Total dividends (Millions of yen)75
Note: Reduction rate in net assets due to the dividends paid from net assets

Year-end
15,178,083.00
75
2Q-end: 0.002

Total
30,356,166.00
151
Year-end: 0.002

Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance2(1) Explanation of Results of Operations

2(2) Explanation of Financial Position

3(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements

3

2. Quarterly Consolidated Financial Statements and Notes

4(1) Quarterly Consolidated Balance Sheet

4(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
Income6

Quarterly Consolidated Statement of Income(For the Three-month Period)

6

Quarterly Consolidated Statement of Comprehensive Income(For the Three-month Period)(3) Notes to Quarterly Consolidated Financial Statements

7
8(Going Concern Assumption)

8(Significant Changes in Shareholders’ Equity)

8(Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements)

8(Additional Information)

8(Segment Information)

9(Significant Subsequent Events)10

3. Other
Important Information about Going Concern Assumption

1111

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the first quarter (January 1 to March 31) of 2019, the Japanese economy recovered slowly as the employment
continued to improve with the support of the strong corporate earnings. However, the outlook remains uncertain
because of concerns about slowing economic growth in China, Brexit, U.S. trade policies, the upcoming
directions of financial and equity markets, and other reasons. In Japan’s retail industry, consumers continue toeconomize and seek low prices as they retain a defensive stance about spending. In addition, competition among
retail companies and companies in outside the retail sector is increasing. The emerging risk of higher prices ofraw materials and logistics services create more challenges. As a result, the operating envir onment in the retailindustry remains difficult.
Net sales in the first quarter decreased 21.4% year-over-year to 20,952 million yen due to a policy of optimizing
the size of the mail-order business.
There was an operating loss of 395 million yen compared with a 1,454 million yen loss in the same period of 2018.
This was attributable to measures to lower the cost of sales ratio and all categories of selling, general andadministrative expenses. Ordinary profit was 141 million yen compared with a loss of 1, 393 million yen in thesame period of 2018 due to an increase in share of profit of entities accounted for using equity method. Profit
attributable to owners of parent was 6,974 million yen compared with a loss of 1,565 million yen in the same
period of 2018 mainly due to a gain on sales of non-current assets and a gain on sales of investment securities.
Overview by segment(Mail-order Business)
Consolidated sales in the mail-order business, centered on the catalog and the Internet businesses, decreased
28.2% year-over-year to 15,288 million yen in the first quarter. There was an operating loss of 265 million yen
compared with a loss of 1,318 million yen in the same period of 2018.
(Bridal Business)
Consolidated sales in the bridal business, centered on the house wedding business, increased 9.6% year-over-year
to 4,034 million yen. There was an operating loss of 234 million yen compared with a loss of 247 million yen in
the same period of 2018.
(Corporates Business)
Consolidated sales in the corporates business, which provides products and services to corporations, decreased
3.3% year-over-year to 1,105 million yen, and operating profit decreased 1.2% year-over-year to 72 million yen.
(Others)
Consolidated sales in other businesses, which include childcare support business, services business, andmanufacturing and sales of cosmetics, decreased 4.0% year-over-year to 524 million yen. Operating profit
decreased 17.6% year-over-year to 31 million yen.

(2) Explanation of Financial Position(Balance sheet position)
Assets totaled 75,984 million yen at the end of the first quarter of 2019, an increase of 35 million yen from theend of 2018.
Current assets increased 3,910 million yen to 44,206 million yen. The main factor was an increase of 7,109
million yen in cash and deposits, while there were decreases of 1,730 million yen in notes and accounts
receivable-trade and 1,056 million yen in merchandise and finished goods. Non-current assets decreased 3,875
million yen to 31,778 million yen. The factors included decreases of 2,953 million yen in property, plant andequipment, 197 million yen in intangible assets, and 724 million yen in investments and other assets.
Current liabilities decreased 5,749 million yen to 23,019 million yen. The main factors were decreases of 3,599
million yen in other and 1,128 million yen in electronically recorded obligations-operating. Non-current liabilities
decreased 616 million yen to 11,710 million yen. The main factor was a decrease of 331 million yen in long-termloans payable.
Net assets increased 6,401 million yen to 41,254 million yen mainly due to booking of profit attributable toowners of parent of 6,974 million yen. As a result, the equity ratio was 54.3%.
Starting with the beginning of the first quarter of 2019, Senshukai has applied the “Partial Amendments to
Accounting Standard for Tax Effect Accounting” (Accounting Standards Board of Japan (ASBJ) Statement No. 28,
February 16, 2018), etc. Prior-year figures have been adjusted retroactively in order to facilitate comparisons.
(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements
Senshukai has revised its consolidated outlook for fiscal year 2019 (January 1, 2019 to December 31, 2019) thatwas released on February 8, 2019. For more information, please refer to “Notice of Revisions to Consolidated
Outlook” (Japanese version only) that was announced today (April 25, 2019).

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheet(Millions of yen)
1Q 2019(As of Mar. 31, 2019)

Fiscal Year 2018
(As of Dec. 31, 2018)
AssetsCurrent assets
Cash and deposits

17,15024,259Notes and accounts receivable-trade

5,532

3,802

Merchandise and finished goods

9,732

8,676

Accounts receivable-other

6,110

5,152

Other

1,903

2,443

Allowance for doubtful accounts

(133)

(127)

40,29544,206

Buildings and structures, net

13,606

12,193

Land

8,477

6,811

980

1,105

23,063

20,110

1,736

1,672

729

596

2,466

2,269

Investment securities

6,458

5,954

Other

3,846

3,591

Allowance for doubtful accounts

(180)

(146)

Total investments and other assets

10,1239,399

35,65331,77875,94975,984

Total current assets
Non-current assets
Property, plant and equipment

Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets

Total non-current assets
Total assets

(Millions of yen)
1Q 2019(As of Mar. 31, 2019)

Fiscal Year 2018
(As of Dec. 31, 2018)
Liabilities
Current liabilities
Electronically recorded obligations-operating

6,631

5,503

Accounts payable-trade

4,836

4,089

Short-term loans payable

1,468

1,290

Current portion of bonds with share acquisition rights

4,340

4,340

Income taxes payable

318

53

Provision for sales promotion expenses

305

277

Provision for bonuses

291

488

Other

10,575

6,976

Total current liabilities

28,76823,019Long-term loans payable

9,799

9,467

Net defined benefit liability69

3

Non-current liabilities

Provision for management board incentive plan trust

2

1

Other

2,456

2,237

Total non-current liabilities

12,327

11,71041,096

34,730Capital stock

22,30422,304

Capital surplus

23,712

17,571Retained earnings(3,526)

9,684

Treasury shares(6,932)(6,932)

Total shareholders’ equity

35,55842,628Valuation difference on available-for-sale securities

605

248

Deferred gains or losses on hedges

60

18

Total liabilities
Net assets
Shareholders’ equity

Accumulated other comprehensive income

Revaluation reserve for land

(1,346)(1,517)

Foreign currency translation adjustment

(61)

(76)

Remeasurements of defined benefit plans

(47)

(46)

Total accumulated other comprehensive income(789)(1,373)84-

34,853

41,25475,94975,984Non-controlling interests
Total net assets
Total liabilities and net assets

(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
Income(Quarterly Consolidated Statement of Income)(For the Three-month Period)
1Q 2018(Jan. 1, 2018 – Mar. 31, 2018)(Millions of yen)
1Q 2019(Jan. 1, 2019 – Mar. 31, 2019)

Net sales

26,673

20,952

Cost of sales

15,083

10,903Gross profit

11,58910,049Selling, general and administrative expenses

13,044

10,445

Operating loss

(1,454)(395)

Interest income

86Dividend income
Share of profit of entities accounted for using equity
methodGain on adjustment of account payable

4

7

263

476

46

73

Other

70

38

Total non-operating income

393

601

Interest expenses

39

33

Commission fee

254

7

Other

38

22

Non-operating income

Non-operating expenses

Total non-operating expenses

332

64

(1,393)141

Gain on sales of non-current assets

0

5,617

Gain on sales of investment securities

21

926

Gain on sales of shares of subsidiaries and associates-

336

Subsidy income-

4

Total extraordinary income

21

6,885

0

16

-

4

115

1

Ordinary profit (loss)
Extraordinary income

Extraordinary losses
Loss on sales and retirement of non-current assets
Loss on reduction of non-current assets
Impairment loss
Loss on sales of shares of subsidiaries and associates-

4

Business structure reform expenses

19

18

Other

-

1

Total extraordinary losses

134

46

Profit (loss) before income taxes(1,506)

6,980

Income taxes

60

5Profit (loss)(1,566)

6,974

Loss attributable to non-controlling interests(0)-

Profit (loss) attributable to owners of parent(1,565)6,974

(Quarterly Consolidated Statement of Comprehensive Income)(For the Three-month Period)
1Q 2018(Jan. 1, 2018 – Mar. 31, 2018)
Profit (loss)(Millions of yen)
1Q 2019(Jan. 1, 2019 – Mar. 31, 2019)(1,566)

6,974

Valuation difference on available-for-sale securities

(192)

(356)

Deferred gains or losses on hedges

(212)

(30)

(5)

(2)

1

(24)

(409)

(413)

(1,975)

6,561(1,974)

6,561

(0)

-

Other comprehensive income

Foreign currency translation adjustment
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

(3) Notes to Quarterly Consolidated Financial Statements(Going Concern Assumption)
Not applicable.
(Significant Changes in Shareholders’ Equity)
At the annual general meeting of shareholders on March 28, 2019, shareholders approved a resolution to eliminate
the retained earnings deficit. In accordance with Article 452 of the Companies Act, other capital surplus wasdecreased by 6,065 million yen and this amount was transferred to retained earnings brought forward. This
process decreased the capital surplus by 6,065 million yen and increased the retained earnings by 6,065 million
yen in the first quarter of 2019.
(Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements)(Calculation of tax expense)
The tax expenses are calculated by first reasonably estimating the effective tax rate after the application of tax
effect accounting with respect to profit before income taxes for the fiscal year in which the quarter under review
falls, and multiplying that rate by the profit before income taxes for the quarter under review. However,Senshukai uses legally stipulated effective tax rates to calculate tax expenses for cases in which using estimatedtax rates gives a noticeably irrational result.
(Additional Information)(Application of the Partial Amendments to Accounting Standard for Tax Effect Accounting)Senshukai has applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ
Statement No. 28, February 16, 2018), etc. at the beginning of the first quarter of 2019. Accordingly, deferred tax
assets and deferred tax liabilities are reclassified and included in the investments and other assets section and thenon-current liabilities section, respectively.

(Segment Information)
I 1Q 2018 (Jan. 1, 2018 – Mar. 31, 2018)
1. Information related to sales and profit or loss for each reportable segment
Reportable segment

Net sales
Sales to customers
Inter-segment sales
or transfers
Total
Segment profit (loss)(Millions of yen)Amounts shown on
Adjustment quarterly consolidated(Note 2)statement of income(Note 3)Mail-orderbusiness

Bridalbusiness

Corporates
business

Sub-total

Others(Note 1)

21,303

3,680

1,142

26,126546

26,673-

26,673

209

-

45

255

1

256

(256)

-

21,513

3,680

1,188

26,381547

26,929(256)

26,673(1,318)(247)

73(1,492)37(1,454)0(1,454)

Total

Notes: 1. Others represent the businesses which are not included in any of the three reportable segments and consist of thechildcare support business, services business and manufacturing and sales of cosmetics.
2. The 0 million yen adjustment to segment profit (loss) is an elimination for inter-segment transactions.
3. Segment profit (loss) is adjusted to be consistent with the operating loss on the quarterly consolidated statement ofincome.

2. Information related to impairment of non-current assets, goodwill, etc. for each reportable segment
No major events or changes occurred.
II 1Q 2019 (Jan. 1, 2019 – Mar. 31, 2019)
1. Information related to sales and profit or loss for each reportable segment
Reportable segment

Net sales
Sales to customers
Inter-segment sales
or transfers
Total
Segment profit (loss)(Millions of yen)Amounts shown onquarterly consolidated
Adjustment
statement of income(Note 2)Mail-orderbusiness

Bridalbusiness

Corporates
business

Sub-total

Others(Note 1)

15,288

4,034

1,105

20,428524

20,952-

20,952

226

0

0

227

0

227

(227)

-

15,515

4,034

1,106

20,655524

21,180(227)

20,952

(265)

(234)

72

(426)

31

(395)

-

(395)

Total

Notes: 1. Others represent the businesses which are not included in any of the three reportable segments and consist of thechildcare support business, services business and manufacturing and sales of cosmetics.
2. Segment profit (loss) is adjusted to be consistent with the operating loss on the quarterly consolidated statement ofincome.

2. Information related to impairment of non-current assets, goodwill, etc. for each reportable segment
No major events or changes occurred.

(Significant Subsequent Events)(Reduction in capital stock)
On February 15, 2019, the Board of Directors of Senshukai approved a resolution to submit a proposal to reduce
the amount of capital stock to the 74th annual general meeting of shareholders on March 28, 2019. This proposal
was approved at this meeting.
1. Purpose
Capital stock will be reduced and the reduction transferred to the capital surplus for two purposes. First is to give
Senshukai more flexibility and agility concerning future actions involving capital. Second is to increase future
cash flows by making Senshukai subject to appropriate taxation.
2. Overview(1) Reduction in capital stock
Capital stock will be reduced by 22,204,934,244 yen from 22,304,934,244 yen to 100,000,000 yen.
(2) Method used for reducing capital stock
Pursuant to Article 447, Clause 1 of the Companies Act, capital stock will be reduced as explained in thepreceding item and the entire reduction will be transferred to the capital surplus.
3. Schedule(1) Date of resolution of meeting of the Board of Directors:(2) Date of resolution of annual general meeting of shareholders:(3) Official end of period for creditors to state their objections:(4) Effective date:February 15, 2019
March 28, 2019
May 7, 2019 (tentative)
May 8, 2019 (tentative)3. Other
Important Information about Going Concern Assumption
In the first quarter of 2019, Senshukai Group had a consolidated operating loss of 395 million yen, ordinary profitof 141 million yen and profit attributable to owners of parent of 6,974 million yen. However, in 2018, there wasan operating loss of 4,063 million yen and a loss attributable to owners of parent of 6,027 million yen. These
losses create significant doubts about the going concern assumption. To eliminate these doubts and improve
results of operations, business structural reforms centered on the mail-order business are under way in accordancewith a medium-term management plan that started in 2019 and will end in 2021.
This plan include following initiatives:(1) Reduce the mail-order business to the proper size by cutting the number of sizes and models of merchandise
sold, lowering inventories and taking other actions.
(2) Improve operations by shortening lead times for producing merchandise, selling a higher percentage ofmerchandise at list prices, holding down the occurrence of surplus inventories, increasing joint activities with
suppliers and taking other actions.
(3) Rebuild the model for attracting customers, centered on catalogs, by establishing a model for attracting
customers that combines analog and digital elements, reexamining the media plan and catalog distribution
method, improving the quality of customer interactions by upgrading digital marketing and Internet customer
contact, and taking other actions.
(4) Reexamine the group’s organizational structure and human resource systems by combining and eliminatingorganizational units, using voluntary retirement program, and taking other actions.
(5) Cut costs and reduce assets, centralizing activities at each department, selling Osak a head office, and taking
other actions.
(6) Reorganize the Senshukai Group by merging subsidiaries that perform similar functions, and taking otheractions.
Some initiatives in the mail-order business have already been completed in 2018, such as inventory reductions
and the adjustment of personnel expenses to the proper level. The benefits of these actions are already beginning
to appear in 2019.
In addition, for renewed growth, the organizational units that determine and execute marketing activ ities will bebased on customers rather than merchandise and marketing uses an approach that reflects the behavior patterns ofcustomers. Furthermore, the organizational structure and business processes will be been rebuilt to establish clear
lines of accountability for earnings and inventories. The goal of these initiatives is to improve our ability to sellmerchandise. We are determined to use these measures to construct a solid earnings foundation and renewed
growth in order to achieve a recovery in sales and earnings and stabilize the performance of the Senshukai Group.
At the end of the first quarter, cash and deposits were 24,259 million yen. Senshukai also has a credit line of 10
billion yen with financial institutions. Consequently, we believe there are no concerns about our liquidity because
we have a sufficient amount of working capital.
For these reasons, we believe there are no significant uncertainties regarding the going concern assumption.

* This financial report is solely a translation of summary of “Kessan Tanshin” (in Japanese, including attachments), which has
been prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience ofreaders who prefer an English translation.