OREANDA-NEWS. July 8 2011. X5 Retail Group N.V., Russia's largest retailer in terms of revenue (LSE ticker: “FIVE”), announced today its retail sales and operational performance for the second quarter and first half of 2011.

Q2 2011 Highlights

H1 2011 Highlights

Consolidated net retail sales increased 41% year-on-year in RUR terms to RUR 112,198 mln or 52% in USD terms to USD 4,006 mln;

Organic sales increased 25% in RUR terms while Kopeyka's Q2 2011 sales contributed approx. 16% to X5's consolidated Q2 2011 RUR net retail

sales growth;

X5's LFL sales grew 10% in RUR terms year-on-year on strong supermarkets LFL performance of 18%, driven by 9% traffic growth;

138 stores added on net basis in Q2 2011, including 134 soft discounters, three supermarkets, seven convenience stores and closure of five Kopeyka stores and one hypermarket; in addition, 270 Kopeyka stores were rebranded as Pyaterochka and one as Perekrestok;

Net addition of 34 thousand sq. m. of selling space.

Consolidated net retail sales increased 44% year-on-year in RUR terms to RUR 224,186 mln or 51% in USD terms to USD 7,832 mln;

Organic sales increased 27% in RUR terms while Kopeyka's H1 2011 sales contributed approx. 17% to X5's consolidated H1 2011 RUR net retail

sales growth

X5's LFL sales grew 11% in RUR terms year-on-year on healthy soft discounters and strong supermarkets performance;

214 stores added on net basis in H1 2011, including 214 soft discounters, five supermarkets, nine convenience stores and closure of 13 Kopeyka stores and one hypermarket; in addition, 316 Kopeyka stores were rebranded;

Net addition of 49 thousand sq. m. of selling space.

• X5 expects 2011 RUR gross retail sales growth to be approx. 40%. Actual top line performance will be largely dependent on inflationary and consumer spending trends.

Andrei Gusev, X5 Retail Group CEO, commented:

"X5 delivered RUR consolidated net retail sales growth of 41% year-on-year for the second quarter 2011, on the back of healthy organic performance at soft discounters and supermarkets and the contribution from acquired Kopeyka stores. Compared to the first quarter of 2011, Russian retail market sequential growth slowed somewhat in Q2 2011 as consumer income declined in real terms. We expect this trend to continue in Q3 2011, after which we expect stronger consumer demand in the fourth quarter. X5 achieved its objectives to maintain price leadership alongside managing supplier inflation to protect margins.

"X5 has made significant progress in its strategic priorities for stepped up growth. We added organically almost twice as many stores during the first half 2011 compared to the same period last year, and are making preparations to open the rest of the 540 stores targeted in our 2011 plan during the second half of the year.

"The fast-tracked Kopeyka integration process ramped up with the temporary closing and rebranding of 271 stores in Q2 2011. All Kopeyka stores outside Central region have been rebranded, doubling the scale of X5 's discounter operations in Volgo-Vyatsky, Centralno- Chernozemny and Sredne-Volzhsky regions. We are already capturing synergies from enhanced purchasing power on Kopeyka sales volumes. We expect to complete the integration by the end of 2011 and to deliver substantial synergies from higher sales densities in 2012, with the full potential to be realized from the beginning of 2013. Our plans are well underway to integrate Kopeyka DCs into X5 's logistics infrastructure this year and to launch Kopeyka best practices across X5 in 2012."