X5 Retail Group today (27 May) lowered its sales outlook for 2010 as it struggles with lower inflation and reduced spending in Russia.

The group said that first quarter net profit increased to US$78.9m, against a loss of $82.1m a year earlier when the result was dented by the depreciation of the Russian rouble.

First-quarter EBITDA rose 10% year-on-year to $178.5m. X5 posted a 36% increase in first-quarter sales to US$2.54bn and like-for-like sales were up 7% on the year.

However, the company warned that full-year sales gains were now expected to total around 20%, down from its previous forecast of 25%.

CEO Lev Khasis said that the low inflation environment had benefited X5's discount formats, while hypermarkets and supermarkets lagged.

Khasis said that X5 hoped to boost the performance of its hypermarket and supermarket businesses by lowering prices and develiping loyalty schemes. 

"We have introduced a streamlined operational structure for supermarkets and hypermarkets and are adding more affordable choices and loyalty program upgrades for our customers to drive higher basket and benefit from future economic recovery,” he said.