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China Nepstar Chain Drugstore Reports First Quarter 2009 Financial Results
Date:5/27/2009

rmance by closing poorly performing stores, being more selective in acquiring new stores and slowing the pace of new store openings, which generally incur high initial costs, but generate lower revenues during their first two years of operations.

In the mean time, Nepstar has been in discussions with local governments in Hubei Province and Jilin Province to obtain support for Nepstar to develop those new markets. Once favorable terms are confirmed, Nepstar will consider entering into those new areas. Also in the first quarter of 2009, the Company is exploring business opportunities with catalogue sales, that is, customers could place orders and receive delivery at home according to Nepstar catalogues for products that are not carried at store level. Sixteen stores across China have been experimenting with catalogue sales of household consumables. We are carefully monitoring and adjusting the experimental model.

Business Outlook

Mr. Wade commented, "We are committed to preserving Nepstar's brand equity and expanding market share. Our strategy is to continue to drive same store sales, while reducing overall costs and leveraging our infrastructure to enhance efficiencies. We are reviewing all aspects of operations, including product mix and pricing to ensure the best and most competitive offerings for our customers.

"We remain hopeful that Chinese healthcare reform is poised to benefit the more than one billion people in China and achieve an overall higher quality of life. The Chinese government's recent stimulus and related healthcare subsidy should significantly expand healthcare spending, which will benefit all aspects of the industry, including the retail drugstore market. We believe the worst is already behind us and look forward to recovery in the balance of the year."

Conference Call Information

The Company's management team will host a conference call,
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SOURCE China Nepstar Chain Drugstore Ltd.
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