30 May 2018

Pyaterochka strengthens managment structure

Moscow, 30 May 2018 – X5 Retail Group ("X5" or the "Company"), a leading Russian food retailer (LSE and MOEX ticker: FIVE), announces changes to the organisational structure of its Pyaterochka chain and the transition to a macro-regional management model. As part of the change, five macro-regions will be established and headed by directors who will report directly to Pyaterochka’s General Director. Each macro-region will consolidate two to four former geographical divisions[1] and from 2,000 to 3,000 Pyaterochka stores.

The structural change has been driven by the chain’s rapid growth, with revenue and store numbers having more than doubled since late 2014. To streamline management processes and maintain current growth rates, Pyaterochka’s headquarters need to delegate some functions. The new macro-regional executives will take on full operational management, allowing headquarters to focus on strategic priorities, setting goals and monitoring progress. This will accelerate decision-making and streamline local promotions and assortment management to better adapt stores to regional markets.

Two macro-regions have been established to date: Moscow[2] and Volga[3]. Another three will be created over the summer, including Urals-Siberia[4] (from 1 June), North-West[5] (from 1 July) and Centre-South[6] (from 1 August). All of the macro-regions will be headed by senior managers from X5 and Pyaterochka.

"We are confident that the new organisational structure will help us deliver on our strategic goals, maintain strong leadership of the food retail market, and fuel further sustainable and effective growth. The growth of our team is another important priority, and the updated organisational structure provides ample opportunities for members of the Company’s talent pool, who were our key candidates in selecting macro-regional senior managers. All of the newly appointed managers have been sourced from our internal talent pipeline, testifying to the strength and great potential of our team," said X5’s CEO and acting General Director of Pyaterochka, Igor Shekhterman.

The structural transformation is expected to be complete by 1 October 2018.​

[1] The division is a standalone business unit of the Company. In most cases, its boundaries coincide with those of Russia’s regions. One division may span several regions and comprise from 500 to 1,000 stores.

[2] Includes Moscow and the Moscow Region

[3]Includes the Republics of Komi, Udmurtia, Tatarstan, Mari El, Mordovia, Chuvashia, as well as the Kirov, Nizhny Novgorod, Penza, Ulyanovsk, Samara and Orenburg Regions

[4] Includes the Republics of Khakassia, Bashkortostan, the Khanty-Mansi Autonomous Area, the Yamal-Nenets Autonomous Area, Altai and Perm Territories, as well as the Kemerovo, Novosibirsk, Tomsk, Omsk, Tyumen, Kurgan, Chelyabinsk, and Sverdlovsk Regions

[5] Includes St Petersburg, the Leningrad, Arkhangelsk, Murmansk, Vologda, Novgorod, Pskov, Tver, Yaroslavl, Ivanovo, Vladimir and Kostroma Regions, as well as the Republic of Karelia and the Nenets Autonomous Area

[6]​ Includes the Republics of Kalmykia, Adygeya, Kabardino-Balkaria, Karachay-Cherkessia, North Ossetia–Alania, the Krasnodar and Stavropol Territories, as well as the Smolensk, Bryansk, Kaluga, Tula, Orel, Kursk, Belgorod, Voronezh, Lipetsk, Ryazan, Tambov, Saratov, Volgograd , Astrakhan and Rostov Regions