Russia's X5 co-founder joins management exodus

MOSCOW, March 5 Mon Mar 5, 2012 7:38am GMT

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MOSCOW, March 5 (Reuters) - A co-founder of Russia's X5 Retail Group is leaving the company, extending a turbulent spell that has also seen the departure of the CEO and the firm's first ever quarterly like-for-like sales fall.

Oleg Vysotski, who co-founded X5's predecessor Pyaterochka in 1999 and now heads up its discount format, told Reuters he had resigned and would "wait and think about other projects in the retail and services sector".

X5 confirmed Vysotski's resignation, adding that he had agreed to oversee a transition period.

"The company has already identified internal and external candidates and is conducting an exhaustive search to consider the broadest pool of management talent for this position," the firm said in a statement.

X5, Russia's biggest retailer by sales, has been mired in management and performance issues since long-serving chief executive Lev Khasis jumped ship to join U.S. giant Wal-Mart last year.

His successor Andrei Gusev slashed the growth target for last year and reported a 2 percent fall in like-for-like sales for the fourth quarter, the company's first since its creation in 2006.

"We view this announcement ... to be the most important event in the row over top management changes in X5 after former CEO Lev Khasis stepped down," VTB Capital analyst Maria Kolbina said in a note.

"Coupled with several consecutive quarters of weak fundamentals, this has created a lot of downbeat sentiment over X5's investment case," she added.

A string of top managers have left X5 since Gusev replaced Khasis, including the directors of supermarkets and hypermarkets, the commercial director, the logistics director and vice president in charge of private labels.

X5's shares are down 35 percent since Khasis resigned a year ago, despite a near 16 percent rally in 2012 to date. (Reporting by Natalia Ishchenko; Writing by Maria Kiselyova; Editing by John Bowker and Will Waterman)

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