For immediate release

Hong Kong, 1 August, 2003 -- Watsons Your Personal Store, the largest health and beauty retail chain in Asia, announced today a new widesweeping retail strategy offering Hong Kong consumers a lowest price guarantee, forever. Watsons new price policy will save Hong Kong consumers $65 million a year. This new strategy aims to further differentiate Watsons in the highly competitive local retail market by offering the lowest price every day on over 1,400 leading personal care and health products. The company is so committed to its new policy that CEO, Mr. Andrew Miles, and his staff made a public pledge to uphold and enforce their guarantee.

"This is the first time a Hong Kong retailer has made such a personal commitment to deliver a price policy on an ongoing basis," said Andrew Miles, Chief Executive Officer for Health & Beauty Asia, AS Watson Group. "We recognize that our customers are facing a poor economy in Hong Kong, are seeing GDP decline and the erosion of their income. This powerful combination has made Hong Kong shoppers focus even more closely on value. We've found that customers want more than the short-term, on-today/off-tomorrow promotions that most retailers offer. That's why we're changing strategy in this radical way. As a leading retailer, Watsons is answering this demand through the lowest price guarantee, not just for a day, but forever."

In order to ensure the implementation of its new price policy, Watsons has gradually adjusted its costs over the last 18 months without affecting its staffing. This adjustment enables Watsons to sustain its Lowest Price Guarantee indefinitely.

To enable its promise will be kept, Watsons has established an in-house Price Centre and a ten person strong team of price checkers. Using a comprehensive system of price monitoring, the price checkers are responsible for checking Watsons prices against all other retailers every day. The Price Centre will direct store operations to react quickly to price challenges and initiate and co-ordinate price changes at individual stores in a timely manner.

Hong Kong consumers can now enjoy Watsons Lowest Price Guarantee on its leading personal care and health products forever. In addition, Watsons will give a Double-the-Difference Refund if any consumer finds one of the lowest price guaranteed products is sold more cheaply elsewhere on the same day. To claim the refund, customers simply present to Watsons a genuine receipt or advertisement issued by a recognized local retailer, showing the lower price of the same item on the same day.

Mr. Miles added that "As we say in the store each day, 'We Dare To Swear, Watsons Guarantees the Lowest Prices.' We want to achieve the customer's 100% confidence in price each time they visit a Watsons store, and we believe this new strategy will help accelerate our business growth in the market."

To ensure all stores and staff are well prepared for the Lowest Price Guarantee programme launched, Watsons has taken the unprecedented step of delaying, for the first time, the opening hour for all its 140 stores in Hong Kong by one hour today.

Supporting the new retail strategy will be two new TV commercials and print advertising that communicates the price policy change to Hong Kong consumers.

Celebrating the opening of its new 3rd generation store at Pacific Place just two months ago, Watsons is optimistic about the local retail market and has five new store openings planned in the next five months. This is in addition to the seven new stores already opened earlier in the year. In the Asian region, Watsons targets to open its 700th store later this year.

About Watsons

Established in 1828, Watsons is the largest personal care retail chain in Asia operating close to 700 stores in 8 markets, including Hong Kong, Taiwan, Mainland China, Macau, Singapore, Thailand, Malaysia and the Philippines. Building on its long-standing reputation for quality and innovation, plus a high degree of consumer confidence, Watsons caters to a variety of lifestyles with an unrivalled diversity of products.

In Hong Kong, Watsons has won a number of customer service awards and operates 140 stores with over 1,600 employees. As a leading chain in town, 34 of its Watsons stores have licensed pharmacy counters.