NEWSRELEASE
June 2016

Doshisha Corporation(Stock code: 7483)
Doshisha Corporation held a results briefing on May 18, 2016 for the fiscal year ended March 31, 2016
(FY3/16). In this report, we present a summary of the Company's consolidated results for FY3/16.

[ Summary of FY3/16 Consolidated Results ]Doshisha reported higher sales and profits in FY3/16, with profits reaching a record-high (Figure 1). We
achieved our forecasts announced at the start of the fiscal year and also our new forecasts revised up
later during the fiscal year.
This mainly reflected continued strong sales from the first half of the year on the back of firm inbounddemand. As a result, net sales reached a record-high of ¥110,843 million, up 6.9% year on year.
Gross profit rose 10.5% year on year to ¥26,962 million, supported by strong sales of new products in
the Product Development Model Business. The gross margin improved 0.8 percentage points to 24.3%.
In sales management, we took steps to increase efficiency, such as overhauling our logistics system.
This supported an improvement in profitability, with operating income rising 33.5% year on year to¥8,736 million, ordinary income increasing 25.4% to ¥8,921 million, and net income up 28.5% to ¥5,754
million.
Figure 1: Summary of FY3/16 Consolidated Results
Consolidated(¥ million)

End of FY3/15

ActualCompositio
n ratio

End of FY3/16

ActualCompositio
n ratio

YoY

ChangeReference
Pct.
change

1/29/16
forecast

ChangePct.
changeNet sales

103,647

100.0%

110,843100.0%

7,196

6.9%

110,000843

0.8%

Product
Development
Model Business

48,56546.9%

52,210

47.1%

3,645

7.5%

54,450(2,239)-4.1%

Wholesale
Model Business

48,90547.2%

55,131

49.7%

6,226

12.7%

51,700

3,431

6.6%

Others

3,932

3.8%

3,501

3.2%

(431)

-11.0%

3,850

(348)

-9.1%

Gross profit

24,39623.5%

26,962

24.3%

2,566

10.5%

26,500462

1.7%

SG&A expenses

17,85317.2%

18,226

16.4%

372

2.1%

18,20026

0.1%

Operating income

6,543

6.3%

8,736

7.9%

2,193

33.5%

8,300

436

5.3%

Ordinary income

7,114

6.9%

8,921

8.0%

1,806

25.4%

8,700

221

2.5%

Net income

4,477

4.3%

5,754

5.2%

1,276

28.5%

5,500

254

4.6%

[ FY3/16 Operating Results by Business Segment ]Our operations are largely divided into two business segments: the Product Development Model
Business and the Wholesale Model Business. The Product Development Model Business plans,
manufactures and sells original Doshisha products. The Wholesale Model Business is acomprehensive sales proposal business, mainly focused on selling and planning sales promotions forleading domestic and overseas brands and products sourced from major manufacturers in Japan. The
product range in the Wholesale Model Business includes well-known luxury brand watches, bags andother items, traditional mid-year and year-end assorted gift packs arranged by Doshisha using
merchandise sourced from leading domestic suppliers, and national brand (NB) processed products.
[ Graph 1: Sales Trends by Business Model ]Product Development Model Business

Wholesale Model Business (Famous brands)

NB processing (Wholesale Model Business)

Other

27.1
24.6

26.5

22.8

22.3

25.4

20.9

(¥ billion)
Product Development
Model Business
Wholesale Model Business(Famous brands)
NB processing (Wholesale
Model Business)
Other

26.5

19.2

27.9

54.6

51.5

52.5

50.8

52.2

FY3/12

FY3/13

FY3/14

FY3/15

FY3/16

54.6

51.5

52.5

50.8

52.2

20.9

19.2

22.8

22.3

27.9

24.6

25.4

26.5

26.5

27.1

2.4

2.9

3.5

3.9

3.5

Product Development Model Business: ¥52,210 million, up 2.8% year on year
The Product Development Model Business reported firm sales of various high value-added products. In
homewares, popular products included frying pans with one-year guarantees and our growing lineup ofsnow cone makers – which have captured the leading market share in Japan. In electrical appliances,
our range of fans sold well, including kamome fans and foldaway fans that have featured heavily in the
media. Our hybrid humidifier with a Cleverin LED also registered firm sales. Mug bottles were popularwith inbound consumers, and in overseas sales there was strong demand for snow cone makers, fans,humidifiers and cosmetics-related merchandise such as haircare products, mainly from consumers in
Asia. Other product categories that registered strong sales were storage and interior products, apparel,
shoes, TVs and single-price merchandise. However, intensifying price competition led to weak sales in
product categories where price is the main differentiator, such as standard-type LED lights and tablewine retailing in the roughly ¥1,000 range. Although not shown in the Figure above, sales of new
products were strong, driving profits 57.1% higher year on year.

Wholesale Model Business: ¥55,131 million, up 12.7% year on year
◆ Famous brands: ¥27,933 million, up 25.0% year on year
Sales of famous brands rose 25.0% year on year. Demand from inbound consumers drove sales ofluxury watches sharply higher. In handbag-related sales, casual brands retailing in the ¥10,000 range
proved popular, as did new products in licensed and developed brands, such as U.S. POLO ASSN. andFurbo design.

◆ NB processing: ¥27,198 million, up 2.4% year on year
In NB processing (gifts), sales of somen and other products were weak in the traditional mid-year giftseason due to poor summer weather. However, sales were strong in the year-end gift season, reflecting
efforts to develop fresh product ideas, such as healthy assortment gift sets, tie-ups with famous brands
such as the Yokohama Royal Park Hotel, and gift sets containing fresh produce.

Other / Affiliated Companies: ¥3,501 million, down 11.0% year on year
[ Sales Trends by Channel ]We registered strong sales to large electronics retailers, which sell our watches and handbags, and to
discount stores, partly reflecting inbound demand.

[ Consolidated Forecasts for FY3/17 ]We forecast higher net sales and profits in the fiscal year ending March 31, 2017, based on thestrategies described below. Please refer to Figure 2 for more details about our forecasts.
We plan to pay a full-year dividend of ¥50 per share after raising the interim dividend to ¥25 per share.
Figure 2: Consolidated Forecasts for FY3/17
Consolidated(¥ million)

FY3/16

FY3/17

YoY
ChangePct.
change1H

2H

Full year

1H

2H

Full year

Net sales

52,60358,240110,843

56,70063,300120,000

9,156

8.3%

Product
Development
Model Business

23,76528,44552,21026,60032,20058,800

6,589

12.6%

Wholesale
Model Business

26,85128,28055,131

28,35029,55057,900

2,768

5.0%

Others

1,986

1,514

3,501

1,750

1,550

3,300

(201)

-5.7%

Gross profit

12,694

14,267

26,962

13,65015,05028,700

1,737

6.4%

SG&A expenses

9,016

9,209

18,226

9,500

9,700

19,200973

5.3%

Operating income

3,678

5,058

8,736

4,150

5,350

9,500

763

8.7%

Ordinary income

3,800

5,120

8,921

4,150

5,350

9,500

578

6.5%

Net income

2,429

3,324

5,754

2,800

3,600

6,400

645

11.2%

[ Changing Business Models (Figure 3) ]In this section, we look at our forecasts in the context of how growth drivers in each business model
have changed over time. Using three business models that have taken shape over the past 40 years –Product Development Model Business, and famous brands and NB processing in the Wholesale Model
Business – we have been able to adapt to change and risk in our operating environment. On manyoccasions, we have encountered setbacks such as the rapid appreciation of the yen, the hollowing out
and realignment of retail formats, and economic downturns after the bubble era and the financial crisis
triggered by the collapse of Lehman Brothers. However, each time, in the face of those challenges, wehave launched businesses, developed new products and business partners, overhauled ourorganization and implemented business reforms, resulting in many years of sustained growth.
Earnings in our famous brand business, part of the Wholesale Model Business, are exposed todevelopments in the wider economy and changing fashions. However, we have reinforced ourrelationship with manufacturers to ensure we have access to stable supplies of popular branded
products, helping to stabilize earnings. We have also grown earnings by handling the latest trending
brands and by introducing our own private label brands. In gift merchandising, another part of theWholesale Model Business, we have focused on developing a wide range of assorted gift sets from theperspective of consumers. This approach has helped us secure the leading market share in mid-year
and year-end gift sets in Japan. In the Product Development Model Business, we have been promoting
a Niche No.1 strategy in product development. We have also built an operating structure that is resilient
to changes in foreign exchange rates by reducing product development times and changing our lineup
of seasonal products and replacing merchandise more regularly.
This illustrates one of our strengths as a company – the ability to deliver sustained growth bygenerating synergies between three very different business models and their associated businessgroups.
Product retailing is another area where we have made progress. Starting in the 1990s, we have
expanded our sales channels through a strategy of setting up sales areas for watches, jewelry andother luxury items in different retail formats that are popular with shoppers, such as large electronics
retailers. As a result, today we supply a total of 4,800 companies with 300,000 stores in Japan andoverseas. Aiming to build on this existing business, we plan to increase our share of in-store sales bydeveloping mixed-category sales area ideas for retailers.

(Figure 3)

Changing Business Models
The strengths of our business models
Three business models that have taken shape over 40 years
We have adapted to change in our markets and overcome other challenges.
However, we have overcome those challenges and generated sustained growth by:• Creating new businesses (operations, products and sales channels)• Implementing reforms to adapt to change (organizational and business reforms).

Product Development Model Business

Acquired Karinpia
Co., Ltd. tomanufacture andSecured andsell single-priceexpandedmerchandise
manufacturing
Wholesale Model Businesssites in China Sharp yen（Gift NB processing）
appreciation
Listed on
TSE 1stLogistics
Sectionsubsidiaryestablished
Sharp yen

Wholesale Model Business（Famous brands）*Consolidated data used for trends inordinary income from FY3/00; nonconsolidated data used prior to this date

Consumption Now
tax hike

Sharp yen Abenomics
appreciation
Great East Japan
Earthquake
GlobalfinancialcrisisCurrent
net sales¥52.2 bn
Current
net sales¥27.9bnappreciation
Listed on
OSE 2nd
Section1995

Ordinary income¥2.5 bn（※）

Current
net sales¥27.1 bn

1997

2001・02・04

Ordinary income¥4.5 bn

2006

2008

2011・12

Ordinary income¥7.5 bn

2013・14・16

Current ordinary
income ¥8.9 bn[ Business Models and Partnerships Unique to Doshisha (Figure 4) ]To drive sustained growth, we have to reinforce our business models, create new businesses andestablish new business groups. Partnerships will have an important role to play in that process. We
have already expanded our existing businesses and created new businesses through “internal
partnerships” that combine and leverage the strengths of our three business models, enabling us torespond to change in the operating environment and create new added value.
One example of these internal partnerships is how we use our retailer base of 4,800 companies – oneof Doshisha’s strengths – as part of our basic sales strategy. Usually, wholesalers find it very difficult tosecure new supply contracts with retailers. The challenge becomes even harder if the wholesaler wants
to supply products in a category that the retailer does not currently handle. Doshisha is different though.
In one case, we secured a deal to supply mid-year and year-end gift sets to a chain of hardware storesthat did not sell food products by offering a complete sales package covering everything from sales
area development to promotion. We now sell a very high volume of gift sets through this channel. How
did we manage to secure this deal to sell gift sets via hardware stores, and how did we work to boost
sales volume through this retail format? The answers lie in our strengths as a company.
Initially, we started supplying market-leading steel rack products to the hardware company, and usingthat as an entry point, developed sales proposals for other product categories that were completely
new in the hardware retail format. In other words, we used one of our 19 categories of clothing, foodand homewares to significantly lower the barriers to entry for the remaining 18 categories, leading to
growth in our share of in-store sales.

Leveraging our strengths in product and sales planning, we intend to extend this approach topartnerships with a range of other companies to complement our own technologies, capabilities andbrands, helping us reinforce existing businesses, create new business groups, diversify risk and give us
more options for business expansion in the future. Our goal is to create 30 new business groups todrive earnings growth.
(Figure 4)

Business models and partnerships unique to Doshisha

DoshishaNow

Suppliers
More than

2,100

In the future

Suppliers
Develop a streamof new productcategories

by adjusting the
supplier mix＜Currently 10 business groups＞
Wholesaling:
3 business groups,
6 business divisions
Product development:
7 business groups,
13 divisions

Retailers

4,800
300,000 storesMore than< Ideas to Make
Life Better >< Internally > Promotecollaboration that crosses
business models< Externally > Promoter
partnerships with othercompanies

Retailers
Grow sales by adjusting
the sales channel mix
Reinforce e-commerceand overseas sales
channels, as well as
existing sales channels

Create 30 new business groups by strengthening existing

businesses, creating new businesses[ Business Strategy for FY3/17 ]< Strategy to Strengthen Doshisha >◆ Reinforce e-commerce and overseas sales; accurately target inbound demand
We see potential for sales growth and market growth in the e-commerce format and overseas sales
channels. We have therefore positioned them as priority areas in our strategy to strengthen Doshisha.
We have already launched an inter-business group project to boost sales in the e-commerce format,
but we plan to step up our efforts in this area. Building on progress in FY3/16, we plan to continue
developing overseas sales channels in FY3/17 using a company-wide sales structure led by aspecialist team. This team will focus on Asia and North America. We have received a large number ofinquiries from major firms in Asia recently, suggesting real potential for business expansion.
Although inbound demand is gradually changing in terms of products purchased and price points, we
expect demand to remain strong. We aim to respond swiftly to these changes by leveraging ourstrengths – a broad lineup of products from single-price ¥100 merchandise to luxury watches, and theability to rapidly develop and procure new products using our network of 2,100 suppliers. However,given the uncertain market outlook, we have not factored these two strategies into our forecasts forFY3/17, so any boost will be an added bonus.

◆ Step up sales promotion
Use the latest methods to create a multifaceted sales promotion strategy; step up
marketing of Doshisha products from the perspective of the consumer
Starting in 2H FY3/16, we began implementing a company-wide promotion strategy to raise the visibilityof the Doshisha brand. We are using a range of media, including online and social media, transport
advertising, promotional events, TV and magazines. That in turn has led to an increase in the numberof newspaper and magazine articles and TV programs featuring products developed by Doshisha. In
FY3/17, we plan to add the latest market methods to our existing approach and step up sales
promotion from the perspective of the consumer.
Specifically, we plan to use content marketing, focusing on newmodels in our range of kamome fans, which were developed
through a tie-up with Nakashima Propeller Co., Ltd. We will use
the internet to distribute effective promotional videos andlaunch an advertising poster campaign targeting key stations in
the Tokyo metropolitan area, aiming to raise brand visibility andcreate a buzz around our products to stimulate demand.
kamome fan website (Japanese only)
http://www.d-designing.com/kamomefan/r/
Or scan the QR code to see the videos
kamome fan promotional videos (Japanese only)
https://www.youtube.com/channel/UCqMZWv6OKVlytzYwi863PPw
https://www.youtube.com/watch?v=ew65v0HSv0I◆ Initiatives to reduce logistics costs
Building new logistics center in Kisarazu to cover Kanto area, creating proprietarydual-hub network
We are reinforcing our logistics system to support further growth and profits. Our aim is to create a
proprietary dual-hub logistics network to reduce distribution costs and diversify risk. Our first center has
been open for some time and is located in Sennan, Osaka. Our second center will be built in Kisarazu,
Chiba Prefecture on a roughly 40,000m2 plot acquired in January 2016. When finished, the logistics
center will have total floor area of around 60,000m2. We plan to open the Kisarazu logistics center inautumn 2017. By ending our reliance on third-party warehousing providers in the Kanto area, where
distribution volume and costs are high, we will eliminate cash outflow for this service and reduce
logistics costs by distributing products from the optimal location. The new center will also give us
greater storage and shipment capacity, helping to diversify risk during natural disasters.

< Strategy for the Wholesale Business Model >(Famous Brands)◆ Step up efforts to promote and expand sales of private label brands and licensed
brandsWe plan to reinforce our brand business by nurturing private label brands and licensed brands. In
private label brands, we are using celebrities to raise brand visibility. Actor Toru Nakamura is ourambassador for men's brand Furbo design and actress Nao Tsuchiya is
our ambassador for women’s brand Rubin Rosa. In licensed brands, we
added two brands to our portfolio, U.S. POLO ASSN. and Italian ladies’
bag brand Giulietta Verona. With the latter brand, we are taking a new
approach, displaying Giulietta Verona products at exhibitions andfashion shows where we can appeal directly to consumers, and using
Instagram and a wide range of other media to promote the brand. We
have high hopes for the brand using this approach.
Giulietta Verona
Furbo design homepage (Japanese only)
http://www.furbodesign.com/
Rubin Rosa homepage (Japanese only)
http://www.rubinrosa.com/
Giulietta Verona homepage (Japanese only)
http://www.giuliettaverona.jp/#
Giulietta Verona Instagram page (Japanese only)
https://www.instagram.com/explore/tags/giuliettaverona/
Giulietta Verona Facebook page (Japanese only)
https://www.facebook.com/giuliettaverona.jp/(National Brand Processing)◆ Strengthen our lineup of casual gifts for the 20-30s age group, create a new cultureof gift and present giving
Changing gift giving culture to spur growth in the market
In Japan, gift giving has been centered on mid-year and year-end traditional presents and gifts offered
in reciprocation for a Buddhist celebration or ritual. Working with external partners, we are aiming tocreate a new culture of gift and present giving in Japan by changing when and how we give presents.
We will offer two new types of gift in FY3/17. The first, developed with an external partner, is anassortment of local souvenirs from roadside stops across Japan. We believe there is significant
demand for these local souvenirs as daily items, not just as tourist souvenirs, and they have typically
only been available from roadside stops or at special sales events in department stores. By teaming up
with a partner that has detailed knowledge of Japan’s roadside stops and using our own gift design
skills and distribution network, we can now deliver these local souvenirs to consumers all year round.

The second area is internet gift giving, which we plan to develop further in FY3/17. Again, we haveteamed up with an external partner that has extensive expertise in networks. Our aim is to create easierways of sending gifts, ultimately spurring a new culture of present and gift giving. Until now, people
have needed the address of the gift recipient, but with our new system, users can use Line or othersocial media apps to send presents easily without knowing the address. The process is just as easy forthe person receiving the gift, who can accept the present simply by clicking on an accept button in theapp. This is designed to make the whole gift giving process easier for people in their 20s and 30s, who
tend not to send traditional mid-year and year-end gifts. We plan to extend this system to mid-year andyear-end gifts in order to generate new demand in existing present categories.

< Strategy for the Product Development Business Model >◆ Using three Doshisha approaches to expand sales in popular product categories
Consumers in Japan have been focusing on price for some time. This trend became even more
pronounced in FY3/16, partly due to the deflationary market environment. Despite this tendency, weknow that simply competing on price is insufficient to attract buyers at a time many people already havemore than enough possessions. In other words, we need to highlight all the value of each product andshow how it offers value for money. Our approach is to “make products better, cheaper and more
specialized,” using our manufacturing capabilities to spike the interest of consumers withgroundbreaking products based on new value propositions.
To achieve that, we will leverage our manufacturing strengths, which are listed below, and three unique
Doshisha approaches: niche strategy, rapid product development, and value for money. Based on thatapproach, we plan to launch a number of new and upgraded products in FY3/17, including a
deodorizing LED light bulb, an electrical massage chair, small and mid-size 4K TVs, a new
Taiwanese-style sweet snow cone maker, an upright vacuum cleaner, kamome fans, and a range ofluminous steel racks for business users.
[ Doshisha’s manufacturing strengths ]Fabless manufacturer capabilities, manufacturing spanning many categories, inventory management
know-how, high-quality production and management framework, and business links to 4,800 retailers
with 300,000 stores_____________________________________________________________________________________________________________________________________________________
Business performance forecasts, outlooks and business plans discussed in these materials are derived fromassumptions based on projections of the future business climate at the time that these materials were released. A
variety of uncertainties and other factors contained in these forecasts, as well as future changes in business
operations and economic conditions, could cause actual results to differ materially from the forecasts found inthese materials. Accordingly, no guarantee is offered regarding the Company’s future business performance as
projected in these materials.

[ IR contacts]
Tokyo:
Takahiro Suzuki
Executive Officer,
Director, Marketing and Planning Division, responsible for IR & PR
TEL：03-6408-5578
E-MAIL：takahiro-suzuki@doshisha.co.jp
Osaka:

Koyanagi
Managing Executive Officer
Responsible for business planning, HR planning and Italy Office,Executive Secretary to the President,
Director, HR Planning Division, responsible for IR & PR
TEL：06-6121-5666
E-MAIL：n-koyanagi@doshisha.co.jp[ Homepage ]Doshisha Corporation
http://www.doshisha.co.jp/_____________________________________________________________________________________________________________________________________________________*Information in this press release is accurate as of the date of release*Please be aware that content may be revised without warning.