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Wanda's response to adjustments to Department Stores and Superstar KTVs

Aug 24,2015

Media has recently reported on the relevant information about adjustments to the operation of some of Wanda's department stores and Superstar KTVs. Qu Dejun, president of Wanda Commercial Management Co., Ltd., offers an official response to this.

Mr. Qu said that Chinese consumers' consumption habit and style have changed greatly with the development of e-commerce and shopping centers. The large retail stores are unavoidably impacted. Some individual Wanda department stores have reported a loss. Making adjustments to these stores is normal business behavior by an enterprise. Adjustments to Wanda department stores will be made on a store-by-store basis. First, Wanda plazas suitable for doing large retailing business will continue to engage in retailing as we team up with renowned enterprises in the retail industry. Second, for Wanda plazas not suitable for doing large retailing business, we will re-allocate the business area where the department stores were located and bring in business that is more suitable for Wanda plazas. Third, traditional department-store products that are popular among consumers such as jewellery, cosmetics and footwear will be retained even at Wanda plazas where there are no department stores.

As for adjustments to Superstar, Mr. Qu said the KTV industry is a special industry. Due to the impact of national industry policies, profits are slim at KTV chain stores, making it not very suitable for a big enterprise like Wanda. Wanda's exit from the KTV business does not mean KTV stores will not be found at Wanda plazas. Wanda just transfers the Superstar KTV stores to powerful local operators under the condition that investment can be recovered to make KTV stores at Wanda plazas more down-to-earth.

Mr. Qu stressed that business operation is a process of continuous adjustments and innovations. In the past 10-plus years, Wanda plazas have kept healthy development because they continue to innovate and adjust in light of market demand as they develop rapidly. Even against the background of the development of e-commerce, customer traffic at Wanda plazas that have already opened in the first half of the year reaches 924 million customers, up 27.8% from a year ago. Daily customer traffic is 50,000 customers on average at one Wanda plaza. Particularly, most of the Wanda plazas that have opened in the earlier years post at least a double-digit growth in daily customer traffic. Since the adjustments to Wanda plazas are strategic adjustments made in light of market prospects and consumer demand changes, Wanda plazas will have higher rental income after the adjustments. "Market is the standard; win-win is the goal". Wanda plazas will continue to innovate in business operation in light of market changes to achieve the joint development of Wanda plazas, merchants and consumers.

Mr. Qu also pointed out that the adjustments to Wanda department stores and Superstar KTVs are related to Wanda's overall strategic transformation. Wanda Group is undergoing the fourth transformation as it shifts from some traditional industries to industries with more promising development prospects like culture, tourism and sports.

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