X5 Retail Group, Russia’s largest retailer by sales, has scaled down its expansion plans over fears that turmoil in the financial markets will dent demand, despite posting a sharp rise in like-for-like sales in the third quarter.

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Like-for-like sales over the three months to 30 September rose by 21% compared with the same period a year ago. Total sales rose by 48% to US$2.2m, the company said in a trading update this morning (10 October).


During the quarter, X5 opened an additional 36 stores.


“The third-quarter results came out in line with the management’s expectation as we continued to see healthy consumer demand despite financial markets’ turbulence and weak seasonality typical for modern retail in this quarter,” chief executive Lev Khasis said.


“At the same time, we understand that the financial crisis may in the end affect consumer confidence, so we closely track our customer behaviour and are ready to quickly respond to changes in consumption patterns.”

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X5 has reduced its capital expenditure estimates for the full year to $1bn, down from $1.4bn. The group said it now expects retail space to grow by 45,000 square metres compared with its previous estimate of 60,000.


“We decided to defer certain projects in order to consolidate resources in the current liquidity-constrained environment, reduce short-term debt exposure and ensure that we are well positioned to capitalise from the ongoing decrease in real estate prices, lower construction costs and emergence of attractive M&A opportunities,” the company concluded.