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Spanish fashion giant Inditex suspends activity in Russia and closes its 502 stores
REUTERS

Spanish fashion giant Inditex suspends activity in Russia and closes its 502 stores

The Russian market, by number of stores, is the second largest after Spain, employs 9,000 staff and contributes around 10 per cent of the global operating profit for the company behind famous brands such as Zara

CLARA ALBA

Monday, 7 March 2022, 10:17

The Spanish fashion giant Inditex has announced that it is closing its 502 stores in Russia, with immediate effect, following Putin’s invasion of Ukraine. The textile retail group, famous for brands such as Zara, is also suspending sales in Russia on its online platform. ... The decision will affect around 9,000 employees in the country.

In a note sent to Spain’s National Securities Market Commission (CNMV), the fashion group founded by Amancio Ortega explains that "in the current circumstances it cannot guarantee the continuity of operations and commercial conditions in the Russian Federation." For this reason, it will temporarily suspend its activity in the 502 stores it has in the country, of which 86 are from the Zara chain.

It is not an easy decision for the business group. Russia constitutes around 8.5 per cent of its global nett operating profit and is its second largest market after Spain by number of stores. As detailed by the company, the income before taxes in the region amounted to 86 million euros in 2020 (229 million euros in 2019). The group operates all its stores on a rental basis.

Support for 9,000 employees

One of Inditex's great concerns while making the decision has been the immediate future of the 9,000 employees it has in Russia. In the statement sent to the Spanish stock market supervisor, the company explains that "Inditex continues to support its workforce as a priority." For this reason, they have already begun to develop a special plan for these workers.

Inditex becomes the latest textile giant to leave Russia, after Mango and H&M did so in recent days, although both have less presence in the country, with fewer stores and employees. Specifically, Mango has 120 stores in Russia, of which 65 are franchises, while H&M had 168 stores at the end of 2021.

What is clear is that the trickle of business departures appears unstoppable and is expected to continue in the coming days. Western multinationals such as Ikea, Apple, Exxon Mobil, Boeing, Ford, Disney or Mastercard are just a few other examples of big names that have already left the country in recent days. And it's not just about closing physical businesses, Internet operations can hit consumers in a harder way in a country already affected by the economic sanctions of Europe and the United States.

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surinenglish Spanish fashion giant Inditex suspends activity in Russia and closes its 502 stores