Shares in London-listed X5 Retail group, Russia's largest retailer by sales, rose today (28 may) despite foreign exchange costs leading to a first-quarter loss for the firm.

X5 reported a net loss of US$82m for the three months to the end of March due mainly to a "non-cash foreign exchange loss".

On a pro-forma basis, which includes the impact of X5's Karusel acquisition in the first quarters of 2008 and 2009, sales dropped 8% to US$1.87bn due to the depreciation of the rouble. In roubles, sales were up 28%.

EBITDA fell 8% to US$162.7m although EBITDA margins held firm at 8.7%. X5's gross margins fell by 100 basis points as the firm cut prices at its Pyaterochka stores, although the group's like-for-like sales climbed 13% in roubles.

CEO Lev Khasis said the retailer's price-cut campaign at its Pyaterochka stores had won a "very encouraging" response from consumers.

However, Khasis cautioned that the Russian economy presented a challenge to other retail formats. "Pyaterochka's phenomenal success is a clear indicator that trading down trends persist, consumers remain extremely price-conscious, and this currently presents a challenging operating environment for other formats," he said.

At the end of March, X5 had 1,144 company-managed stores located in Moscow, St. Petersburg and other regions of European Russia, the Urals and Ukraine.

The network comprises 886 soft discount stores, 209 supermarkets and 49 hypermarkets.

X5 expects to grow revenues by more than 25% this year in spite of sapping Russian consumer confidence.

Shares in the retailer rose 1.1% to 14.7p at 17:29 BST this afternoon.