OREANDA-NEWS. On May 29, 2007 X5 Retail Group N.V., Russia's largest food retailer in terms of sales (LSE ticker: “FIVE”), announced its preliminary unaudited financial results for the 1st quarter of 2007, reported the press-centre of X5 Retail Group N.V.

Net sales increased by 45,1% in comparison with Q1 2006 and reached US $ 1,106 million.
Gross profit increased by 50,2% to US $ 302 million
Gross profit margin increased from 26,3% to 27,3%
EBITDA increased by 53,3% to US$ 107 million
EBITDA margin increased from 9,2% to 9,7%

Operational highlights
A new leased distributional center “Sholokhovo” was opened in the Moscow region with additional capacity of approx. 20,000 sq. meters.

The Group has successfully completed integration of Merkado stores acquired in November 2006: 10 of the stores are currently operating under Perekrestok brand and 7 stores – under Pyaterochka brand.

The Group continued its regional expansion by gaining control over 40 Pyaterochka ex-franchising stores with total net selling space of 13,811 sq. meters in Chelyabinsk region. In total during Q1 2007, the Group gained additional net selling space of 32,363 sq. meters.  

During Q1 2007, the Group further strengthened positive like-for-like sales trends to reach +21% in US Dollar terms (composed of traffic +8% and basket +13%) or +13% in Rouble terms (composed of traffic +8% and basket +5%), with first over the last few years positive traffic results for Pyaterochka stores in Russia’s most competitive market of St. Petersburg.

In March 2007, the Group announced its new employee stock option program (ESOP) designed to efficiently motivate around 100 key executives and employees. The total number of share options is planned to be capped at 10,824,008 GDRs. The program based on the market value of the shares will run through to 18 November 2010 and options will be granted in 4 tranches, subject to AGM approval on 15th of June 2007.

In March 2007, the Group has finalised its 5-year strategy with clear identification of key formats, geography and logistics strategic goals.

Former Merkado Distribution Centre is designated to become a new HQ of the Company and consolidate three leased office locations in Moscow which will result in savings on rental costs and facilitate better communication and corporate management.

Quotes
Lev Khasis, Group CEO:
“The financial results for the first three months, supported by important operational measures and improvements, are in line with our expectations. Our net sales increased by 45,1% on the back of the successful store opening results of the previous periods and the continuous improvement of LfL sales trends in the key operating regions across both chains. Also, despite of a big portion of new store openings during last few months of 2006, we enjoyed an increase in gross margins across both chains due to continued effort of our purchasing team, upgraded logistics capacity in the core Moscow region and a progress in introduction of private labels.

We especially pleased with ahead-of-schedule and efficient integration of “Merkado” chain which shows that the Company’s has a well established mechanism of quickly integrating acquired chains. The opening of a new distribution centre provides an important support to our store opening program and will allow us to further improve our operations. I look with optimism into 1H 2007 and over.”