MOSCOW, April 12 (Reuters) - Russian food retailer X5 Retail Group has lost its market lead to Magnit, reporting for the first time a smaller quarterly revenue than its closest competitor.
X5 has been struggling to defend its market share after a strategy shift in 2011 to focus on expanding by opening stores rather than through acquisitions.
The company reported on Friday first-quarter revenue of 126.3 billion roubles ($4.1 billion), lagging the 131.2 billion result at Magnit - already the biggest retailer by store count.
'At the risk of seeming immodest, for the first time since we opened our first store 15 years ago we have become the leader in the food retail sector by sales,' Sergei Galitskiy, the CEO and founder of Magnit, said in a statement.
Unlike X5, in which billionaire Mikhail Fridman's Alfa-Group owns nearly 50 percent, Magnit has been pursuing organic growth since its creation, opening low-price convenience stores in small regional cities and targeting mostly low-income consumers.
Although X5 hopes to have stabilised its operations by the end of 2013, it expects revenue growth of just 11 percent compared with Magnit's guidance of 27-29 percent.
X5's like-for-like sales rose 0.5 percent year-on-year in the first quarter, after a flat performance in the previous quarter, as a broad increase in Russian food inflation helped offset lower customer numbers.
Its average bill was up 2.5 percent year-on-year. Traffic, or the number of bills, fell 2.1 percent, showing signs of recovery after a 3.6 percent fall in the previous quarter.
A recent slowdown in Russian household consumption has yet to take its toll on food retailers, which have proved resilient in downturns, but their sales growth is slowing due to increased competition.
O'Key, a smaller domestic rival also listed in London, on Thursday cut its 2013 growth forecasts after a slow start to the year.
($1 = 30.8042 Russian roubles)
(Reporting by Maria Kiselyova; Editing by Douglas Busvine and Mark Potter) Keywords: RUSSIA X5/SALES
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