Q4 revenues & PurCotton sales up at Winner Medical

Winner Medical Group Inc, a leading manufacturer of medical dressings, medical disposables and non-woven PurCotton materials for the medical and consumer products industries in China, announced preliminary, unaudited financial results for its fiscal fourth quarter and full year ended September 30, 2010. 2010 fiscal fourth quarter and year ended results are unaudited and subject to change.

Fiscal 2010 Results
"We maintained stable gross margins and delivered modest fourth-quarter operating results despitepressure from the European debt crisis,a parabolic increase inraw material prices, and a rising RMB, all of which occurred simultaneously," said Jianquan Li, Chairman and Chief Executive Officer of Winner Medical.

"During the past year we have made significant progress on several of our growth initiatives which are evidenced in our full year results, which include stable gross margins. We are confident the actions we have taken will yield further operating benefits during 2011. Our brand and competitive position continues to improve as rising commodity costs drive smaller competitors out of business. As we raise prices and gain additional market share by expanding distribution in China and abroad, we are confident in achieving our revenue growth to our target rate of 20%-30% per annum."

Medical Business Update
Preliminary net sales to Europe grew approximately 5.4% versus the fourth quarter of fiscal 2009. Orders in Europe slowed for the entire industry as the debt crisis hit and clients located in Greece and Spain in particular postponed or cancelled orders. Export sales to North and South America remained robust, growing by approximately 20.7%. The growth was driven by increased orders from American and Brazilian clients, since Winner Medical's quality and delivery punctuality is well recognized.

Cotton prices spiked during the summer, rising over 23% from June 30, 2010 to September 30, 2010. Manufacturers such as Winner Medical raised prices to offset these unprecedented levels of commodity inflation, and customers in China and Japan postponed orders. A positive benefit from soaring cotton prices for Winner Medical in the long-run is that many small competitors without sufficient scale are reducing output and shutting down their manufacturing facilities as they start to lose money.

Approximately 81% of Winner Medical's sales come from export sales denominated in currencies other than the RMB. During the fourth quarter, the RMB appreciated relative to the U.S. dollar.

Under these pressures, Winner Medical is increasing its selling prices to its customers to pass along raw material cost increases. While this will benefit operating results, there is a time lag for these increases to be passed on which will impact net income in the near term.

PurCotton Business Update
Preliminary PurCotton sales grew 35.4% during the fourth quarter to $3.1 million and benefitted from increased sales at the Company's PurCotton chain stores and from jumbo rolls sales to customers in China and Japan.

As of November 12, 2010, Winner Medical owned and operated 23 PurCotton chain stores in major cities in Guangdong Province, including Shenzhen where the corporate headquarters are located. PurCotton stores are primarily located in downtown shopping malls. The stores range in size from 160 to 650 square feet. In order to build a healthy and sustainable retail business, the Company was slowing down the pace of chain stores opening during the third quarter.

After a quarter's careful evaluation on store location and size, product packaging and pricing, brand image, customer service and marketing, the Company has clearer operating and financial metrics. The Company started opening new stores in Guangzhou and other main cities in Guangdong province. It expects to open new stores in Beijing and Shanghai in November and December 2010, respectively.

In July 2010, the Company opened its first online PurCotton store, featuring its entire array of products on Taobao.com, the largest online trading platform in China. This is the Company's first initiative to establish PurCotton Business-to-Consumer (B2C) online stores in order to address the consumers' evolving shopping preferences. In September 2010, the Company also built its own B2C trading website, which is co-branded through its retail stores. Management expects these online initiatives to further strengthen PurCotton's brand awareness and generate incremental sales to new customers.

Customer feedback continues to be excellent as the superior quality and functionality have been embraced. Furthermore, we are confident the price points are structured to ensure additional market share gains. The Company is expanding capacity to support future growth in this important product category.

Preliminary Fiscal 2011 Guidance
Winner Medical expects its total revenues in fiscal year 2011 to be in the range of $138 million to $150 million, representing a 20-30% year-over-year increase. This forecast reflects Winner Medical's current and preliminary view, which is subject to change.