X5 REPORTS 25.7% NET RETAIL SALES GROWTH IN Q2 '16

X5 RETAIL GROUP REPORTS 25.7% NET RETAIL SALES GROWTH IN Q2 2016

ü Total net retail sales growth remained strong at 25.7% y-o-y, driven by:

§ 6.3% increase in like-for-like (LFL) sales; and

§ 19.4% sales growth contribution from a 31.8% rise in selling space.

ü In Q2 2016, X5's LFL traffic growth accelerated to 3.0% y-o-y from 2.0% in Q1 2016 y-o-y.

ü Pyaterochka continued to benefit from a value proposition that is one of the best-adapted for Russian consumers' needs and from its strong opening programme, making it the key driver for X5's Q2 2016 growth. Net retail sales rose by 30.6% y-o-y on the back of:

§ 8.1% rise in LFL sales; and

§ 22.5% increase from net new space, resulting from a 41.1% rise in selling space.

ü In Q2 2016, Pyaterochka broke another company record, adding 235.5 th. sq. m. of selling space, nearly all of which was organic.

ü Perekrestok's net retail sales growth accelerated to 19.2% y-o-y in Q2 2016 from 18.2% y-o-y in Q1 2016.

ü In Q2 2016, Perekrestok delivered positive LFL traffic for the second quarter in a row.

ü X5 added 539 net new stores in Q2 2016 vs. 332 in Q2 2015, contributing to additional net selling space of 233.2 th. sq. m. in the quarter.

Amsterdam, 19 July 2016 - X5 Retail Group N.V. ("X5" or the "Company"), a leading Russian food retailer (LSE ticker: "FIVE"), announces today the Company's preliminary consolidated net retail sales and operational results for the second quarter (Q2) and six months (H1) ended 30 June 2016⁽¹⁾.

Net Retail Sales⁽²⁾ Performance

Net Russian ruble (RUB) retail sales by format, million (mln)⁽³⁾

Q2 2016 monthly net RUB retail sales by format, % change y-o-y

Average Ticket and Number of Customer Visits

Q2 & H1 2016 average ticket and customer visits by format

Q2 2016 average monthly ticket and customer visits by format, % change y-o-y

LFL Sales Performance

Q2 & H1 2016 LFL⁽⁴⁾ store performance by format, % change y-o-y

Q2 2016 monthly LFL store performance by format, % change y-o-y

Expansion Dynamics

Selling space and # of stores by format

Selling space and # of stores added by format

Key Drivers for Q2 2016 Results

Sales

§ X5 demonstrated strong LFL sales performance despite low food inflation and weak consumer consumption during Q2 2016.

§ LFL traffic was positive in each month of the quarter for Pyaterochka and for Perekrestok.

Expansion and refurbishment programme

§ New space delivery continued to accelerate: X5 added 233.2 th. sq. m. of selling space in Q2 2016 vs. 161.9 th. sq. m in Q2 2015. Since the beginning of 2016, X5 has added 414.2 th. sq. m.

§ Pyaterochka was the main driver for the store base increase. In Q2 2016, net added space increased by 64.8% y-o-y.

§ 356 Pyaterochka stores were refurbished in Q2 2016 as part of X5's investment programme to upgrade existing stores. In conjunction with new openings, the share of stores operating under the new concept exceeded 83% as of 30 June 2016.

§ 14 Perekrestok stores were refurbished in Q2 2016, which, along with new openings, brought the total share of stores operating under the new concept to more than 40% as of 30 June 2016.

§ In Q2 2016, as part of the Company's ongoing rationalisation programme, X5 closed 22 Pyaterochka stores, five Perekrestok stores, two Karusel stores and seven Express stores.

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

(2)  Net retail sales represent revenue from operations of X5-managed stores net of VAT. This number differs from revenue, which also includes proceeds from direct franchisees (royalty payments) and other revenue, which will be reported as part of X5's Q2 and H1 2016 financial results.

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

(4)  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.

Note to Editors:

X5 Retail Group N.V. (LSE: FIVE, Fitch - 'BB', Moody's - 'Ba3', S&P - 'BB-') is a leading Russian food retailer. The Company operates several retail formats: the chain of proximity stores under the Pyaterochka brand, the supermarket chain under the Perekrestok brand, the hypermarket chain under the Karusel brand and Express convenience stores under various brands.

As of 30 June 2016, X5 had 7,936 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 7,164 Pyaterochka proximity stores, 493 Perekrestok supermarkets, 89 Karusel hypermarkets and 190 convenience stores. The Company operates 35 DCs and 1,469 Company-owned trucks across the Russian Federation.

For the full year 2015, revenue totalled RUB 808,818 mln (USD 13,268 mln), Adjusted EBITDA reached RUB 59,413 mln (USD 975 mln), and net profit for the period amounted to RUB 14,174 mln (USD 233 mln). In Q1 2016, revenue totalled RUB 231,611 mln (USD 3,104 mln), EBITDA reached RUB 16,493 mln (USD 221 mln), and net profit amounted to RUB 5,054 mln (USD 68 mln).

X5's Shareholder structure is as follows: Alfa Group - 47.86%, founders of Pyaterochka - 14.43%, X5 Directors - 0.06%, treasury shares - 0.01%, 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.