* Slow start to Q3 threatens 2012 sales growth target
* To update on targets at end-Q3
* Search for a new CEO continues
* Posts expectedly weak second-quarter results
MOSCOW, Aug 21 (Reuters) - Russia's largest food retailer by sales X5, struggling to reverse a slowdown in revenues, said on Tuesday it may fail to meet its full-year growth target after a weak start to the third quarter.
Part-owned by billionaire tycoon Mikhail Fridman's Alfa Group, X5 has been dogged by operational issues since changing its strategy and chief executive last year to focus on organic expansion, rather than acquisitions.
Revenue growth has since slowed dramatically despite generally strong consumer sentiment. A number of key senior executives have also resigned to be replaced by new managers mainly from foreign retail chains.
In July, X5 announced the resignation of its CEO Andrei Gusev - who the market had hoped would deliver a turnaround - after a little more than a year in the job.
At the time, X5 also cut its full-year sales guidance to 15 percent from 15-20 percent, citing a slow start to the month.
"Clearly, if this continues, we obviously don't expect even a soft 15 percent year-on-year increase in sales," Chief Financial Officer Kieran Balfe told a conference call on Tuesday, referring to July sales data.
He said, however, that it was too early to cut targets and X5 would update the market at the end of the third quarter.
Balfe said Gusev's departure did not signal a change to X5 strategy and would not lead to "wholesale changes" in the management team once a new CEO was appointed.
He said the search would continue among external and internal candidates from Russia and abroad, without saying any more about potential candidates.
Analysts fear the management issue will delay the recovery of X5, which has lost 15 percent of its market value since the start of the year.
"It may take a while to rebuild an experienced top management team, and we do not expect any turnaround over the next 12 months," said Tigran Hovhannisyan at Uralsib bank.
Maria Kolbina at VTB Capital said the key focus for the market was the new CEO: "Depending on who is appointed, we flag the possible long-term positives of this change. X5 is almost twice as cheap as Magnit and trades at a 31 percent discount to emerging market peers..."
In the first-half of 2012, X5 underperformed its guidance, delivering just 6.9 percent growth in rouble sales, and also disappointed the market with a worse-than-forecast second-quarter gross margin.
The company said second-quarter net profit fell 6.2 percent to $68.9 million compared to a $67.9 million consensus analyst forecast.
Earnings before interest, taxation, depreciation and amortisation (EBITDA) edged down 1.6 percent to $280.3 million, above a $278.2 million forecast.
EBITDA margin came in at 7.0 percent, in line with expectations, while gross margin stood at 22.8 percent, missing a 23.9 percent Reuters poll forecast.
Balfe said X5's recent initiatives would support a recovery in its gross margin back to 23-23 percent levels.
X5's London-listed stock closed up 3.5 percent on Tuesday.