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, announced today that it signed an agreement with an independent third party to manage a new department store in Beijing. The deal reinforces the Company's portfolio in the PRC to 29 stores.
The new department store is situated at Chaoyang District in Beijing's CBD area. With a total gross floor area ("GFA") of approximately 52,000 square metres ("sq.m."), the store is expected to commence operation at the end of 2008. The total GFA of NWDS's operations in Beijing will be increased to more than 184,000 sq.m. as a result.
Commenting on the Company's expansion strategies, Mr. Adrian Cheng, Executive Director of NWDS, said: "We have a three-fold expansion plan. We intend to continue to grow our retail network by opening new self-owned and managed stores in major cities. Also we look for value-enhancing acquisition opportunities, including our managed stores for which we have options or rights of first refusal to acquire. Last but not the least, we will continue to expand our existing stores to capture the growing demand. Our mission is to ultimately become a dominant department store chain operator in the PRC."
Commenting on the new managed store, Mr. Philip Cheung, Managing Director and Executive Director of NWDS, said: "We are delighted at the addition of the new store, which is our second store in Chaoyang District, a prime retail area in Beijing. The store will no doubt strengthen our profile in Beijing and our ability to tap into the city's fast-growing retail sector. As the capital of China and the host city of the 2008 Olympic Games, Beijing is one of the most important cities in our strategic development plan. We are positive about the outlook of its retail market."
Under the agreement, NWDS is commissioned to manage the new store for a three-year term and the Company has the unilateral right to extend the agreement upon the expiration of the original three-year term for a term of three years and a further term of three years upon expiry of the first extended term or for such other period as the Company considers appropriate up to and until the expiration of the lease of the store. In addition, similar to previous management consultancy agreements that the Company has entered with other business partners, NWDS has the right of first refusal to acquire the new store from the owner.