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, recently entered into an agreement with an independent third party to manage and operate a new department store in New Pudong District ("Pudong Store"), Shanghai. Together with its recent expansion of the existing Shanghai Hongkou Branch Store ("Hongkou Store"), NWDS's portfolio in the PRC will increase to 31 stores with retail space covering an aggregate gross floor area ("GFA") of approximately 950,000 square metres ("sq.m.").
At present, NWDS operates six Ba Li Chun Tian-branded department stores in Shanghai. It will open a new department store at Pujian Road in New Pudong District in October 2007, with retail space covering a total GFA of approximately 46,000 sq.m. In addition, the Company will enlarge the retail space of Hongkou Store from 15,500 sq. m. to 19,600 sq.m., which is expected to be in full operation in late August 2007. These will increase the Company's foothold in Shanghai to 7 stores, occupying an aggregate GFA of approximately 197,000 sq.m.
Mr. Adrian Cheng, Executive Director of NWDS, said, "Shanghai has been a popular shopping destination in China. Retail sales generated from the city experienced double-digit growth for 15 years in a roll, at 12.8% in 2006. The persistent increase in consumption power among the local residents, when coupled with the imminent Expo 2010 that the city will host, is expected to further spur retail sales. Leveraging NWDS's extended selection of branded and high-end merchandises, we believe NWDS's 巴黎春天(Ba Li Chun Tian)-branded department store chain is well-positioned to capture the opportunities arising from this metropolitan city. Going forward, we shall continue to identify expansion opportunities in cities where we already have presence."
Mr. Philip Cheung, Managing Director and Executive Director of NWDS, said, "The new Pudong Store is situated at the Tangqiao Commercial Area, in close proximity to residential districts featuring convenient access to the No.4 Metro Line and a public transportation hub nearby. With upcoming completion of more office buildings and hotels, Tangqiao Commercial Area will emerge to become one of the fastest-growing commercial districts in Pudong. This will give rise to tremendous opportunities for our new store there."
Under the agreement, NWDS is commissioned to manage the new store for a three-year term. The Company has an unilateral right to extend the agreement on the expiry of the first term for an additional three-year term, which can further be extended for an extra period of three years as the Company considers appropriate up to and until the lease of the store expires. In addition, similar to previous management consultancy agreements that the Company entered into with other business partners, NWDS has a right of first refusal to acquire the new store from the owner.