X5 Q2 2014 Operating Results

X5 Retail Group REPORTS Q2&H1 2014 Trading Results (1)

Amsterdam, 10 July 2014 - X5 Retail Group N.V. ("X5" or the "Company"), a leading Russian food retailer (LSE ticker: "FIVE"), announced today the Company's preliminary consolidated net retail sales and operational results for the three (Q2) and six (H1) months ended 30 June 2014.

Net Retail Sales(2)(3) Performance

Net Russian Rouble (RUR) retail sales by format, million (mln)

Regional contribution(5) to formats' total net RUR retail sales growth year-on-year (y-o-y), %

Q2 2014 monthly net RUR retail sales by format, % change y-o-y

Average Ticket and Number of Customer Visits

Q2 & H1 2014 average ticket and customer visits by format

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(1) Numbers in this press release are preliminary and have not been reviewed or audited by the Company's auditor.

(2) In the tables and text of this press release, immaterial deviations in calculation of % change, subtotals and totals are due to rounding.

(3) Net retail sales represent revenue from operations of X5 managed stores net of VAT. This number differs from revenue that also include proceeds from direct franchisees (royalty payments) and other revenue, which will be reported as part of Q2 and H1 2014 financial results.

(4 )Refers to Perekrestok Express and Kopeika branded convenience stores; previously disclosed as Convenience stores.

(5) According to the economic classification of Russian regions promulgated by the Ministry of Economy. This classification differs from previously reported information regarding the regional breakdown of our store base, which was based on internal definitions of regions and which has changed in 2013 for some formats.

Q2 2014 average monthly ticket and customer visits by format, % change y-o-y

LFL Sales Performance

Q2 & H1 2014 LFL(1) store performance by format, %

Q2 2014 monthly LFL store performance by format, %

Expansion Dynamics 

Selling space and # of stores by format

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(1)LFL comparisons of retail sales between two periods are comparisons of retail sales in local currency (including VAT) generated by the relevant stores. The stores that are included in LFL comparisons are those that have operated for at least 12 full months. Their sales are included in LFL calculation starting from the day of the store's opening. We include all stores that fit our LFL criteria in each reporting period.

Selling space and # of stores added by format

Regional contribution to formats' total net selling space growth y-o-y in Q2 2014, %

Key Drivers for Q2 and H1 2014 Results

Net retail & LFL sales:

· Selling space expansion and the positive performance of maturing stores added over the past two years;

· Improvement in the average ticket and LFL basket due to changes in composition and increased volume, which were also supported by rising food inflation;

· Improved promotional and marketing campaigns at Pyaterochka;

· Assortment rotation and improvements, particularly in fresh categories, primarily at Pyaterochka and Karusel;

· Improvements in logistics' service levels and product availability on shelves, primarily at Pyaterochka;

· Abnormally cold weather in June 2014 resulting in lower traffic and higher ticket; and

· Calendarization of holidays: four-day long weekend in June 2014, compared to one holiday mid-week in June 2013, which positively impacted basket but had a negative effect on traffic.

Expansion:

· Primarily organic growth in Pyaterochka's Central and Other regions and the Central region for Perekrestok; and

· In Q2 2014, X5 closed 10 Pyaterochkas, three Perekrestoks and 15 Express stores that did not meet the respective formats' efficiency criteria. 

In H1 2014, X5 closed 16 Pyaterochkas, six Perekrestoks, two Karusels and 34 Express stores that did not meet the respective formats' efficiency criteria; additionally the Company disposed of 12 Perekrestok supermarkets located in the Ukraine.

Selling space growth y-o-y as of 30 June 2014 was particularly affected by the closure of two Karusels in Chelyabinsk and St.Petersburg in Q1 2014, with respective selling space of 4.4 and 10.9 thousand sq. m. and the resizing of a Karusel, which decreased net selling space by approximately 3.2 thousand sq. m. in Q2 2014. The disposal of X5's Ukrainian subsidiary in Q1 2014 resulted in a decrease of 11.0 thousand sq. m. in Perekrestok's net selling space.

2014 Financial Calendar

Note to Editors:

X5 Retail Group N.V. (LSE: FIVE, Moody's - "B2", S&P - "B+") is a leading Russian food retailer. The Company operates several retail formats: the chain of economy class stores under the Pyaterochka brand, the supermarket chain under the Perekrestok brand, the hypermarket chain under the Karusel brand, Express convenience stores under various brands and the online retail channel under the E5.RU brand.

At 30 June 2014, X5 had 4,779 Company-operated stores. It has the leading market position in both Moscow and St. Petersburg and a significant presence in the European part of Russia. Its store base includes 4,128 Pyaterochka economy-class stores, 387 Perekrestok supermarkets, 81 Karusel hypermarkets and 183 Express stores. The Company operates 30 DCs and 1,622 Company-owned trucks across the Russian Federation.

For the full year 2013, revenue totaled RUR 534,560 mln, EBITDA reached RUR 38,350 mln, and net income amounted to RUR 10,984 mln. In Q1 2014, revenue totaled RUR 144,167 mln, EBITDA reached RUR 9,796 mln, and net income amounted to RUR 2,469 mln. 

X5's Shareholder structure is as follows: Alfa Group - 47.86%, founders of Pyaterochka - 14.43%, X5 Directors - 0.03%, treasury shares - 0.03%, free float - 37.64%.

Forward looking statements:

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the fact that they do not only relate to historical or current events. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "expected", "plan", "goal", "believe", or other words of similar meaning.

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, a number of which are beyond X5 Retail Group N.V.'s control. As a result, actual future results may differ materially from the plans, goals and expectations set out in these forward-looking statements.

Any forward-looking statements made by or on behalf of X5 Retail Group N.V. speak only as at the date of this announcement. Save as required by any applicable laws or regulations, X5 Retail Group N.V. undertakes no obligation publicly to release the results of any revisions to any forward-looking statements in this document that may occur due to any change in its expectations or to reflect events or circumstances after the date of this document.