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4 Oct

NWDS Announces Acquisition of Chengdu Store

Strengthen the Development Edge of Chengdu as the Core City of Southwestern China

New World Department Store China Limited ("NWDS" or the "Company"; Hong Kong stock code: 825), one of the largest owners and operators of department stores in the PRC, is pleased to announce the Company agreed to acquire the operating right of a managed store in Chengdu, Chengdu New World Department Store ("Chengdu Store"), at a consideration of RMB 2 million with the application on progress. The store will convert from a managed store to a self-owned store of NWDS.

Opened in December 2006, Chengdu Store is the first department store of NWDS in Chengdu which has 6 storeys with gross floor area of approximately 29,500 sq.m.. The store is ideally located in the central commercial area of Chengdu with convenient transportation facilities. It is very close to metro station with complete bus routes, drawing a huge number of consumer traffic. Moreover, the geographic location of the store is excellent with many government apparatus, presenting strong commercial atmosphere.

With rapid development of Chengdu city, the gross domestic product increased 17.5% year-on-year to RMB 237.54 billion in the first half of 2010. Spending power and consumption sentiments were also improving rapidly, judging from the 18.7% rise year-on-year to RMB 117.63 billion in total retail sales of consumer goods and the per capita disposable income of urban residents amounted to RMB 10,715, a year-on-year increase of 13.9%. Chengdu Store is situated in Yan Shi Kou commercial district, where the area has gradually transformed into large-scale commercial center combined with international trendy shopping district from the previous wholesale business and traditional department store district, attracting more customer traffic with enormous market potential.

With its ongoing efforts at merchandize portfolio optimization, Chengdu Store has established a distinct business profile of being fashionable and trendy among industry practitioners in Yan Shi Kou commercial district, becoming the fastest growing department store within the district. In order to enhance the store's competitive advantage, Chengdu Store is striving to become a themed "Fashion Gallery" targeting young potential customers. It introduces a variety of key brands and fashionable fun products, in categories including young ladies' fashion, trendy underwear, stylish men's wear, smart casual wear, sportswear and accessories, to strengthen its market positioning for fashion and trendy. In addition, Chengdu Store has formulated a series of marketing activities in line with its own market positioning. The store teamed up with well-known brands in launching with a number of VIP club activities such as "fashion hair salon", "beauty and health salon" and "practical makeup salon". Such interactive activities increased awareness of the trendy positioning of NWDS among young customers in Chengdu.

Regarding the acquisition, Mr. Adrian Cheng, Executive Director of NWDS, said, ‘NWDS is actively seeking desirable acquisition targets including acquisition of existing potential managed stores. After the acquisition of Kunming Store and Ningbo Trendy Store from parent company last year, the Company acquired Shanghai Pujian Branch Store which is close to the location of World Expo Shanghai in January, as well as Beijing Store, which has a gross floor area of approximately 93,000 sq.m in August this year. Chengdu city is the integrated transport hub with convenient transportation networks in western region. Under the influence of "adjust the structure, maintain the economic growth, ensure the people's livelihood, sustain the stability" policy, the economy of Chengdu has gradually grown, investment and consumption remains a steady and rapid growth, fully indicating the infinite development potential of Chengdu city. After the acquisition of Chengdu Store, we will have two self-owned stores out of three in Southwestern China, further strengthening the development edge of Southwestern China. Aside from the acquisition of current managed stores, we will actively seek worthwhile acquisition targets to facilitate quick inroads into new markets with good growth potential, striving to be the leading department store operator in China.'