Zara owner Inditex closes Russian stores and online platform | Investment News

MADRID (Reuters) – Spanish fashion retailer Inditex has suspended operations in Russia, closing all 502 stores and halting online sales, the company said in a statement on Saturday.

The Zara owner follows some of the biggest Western brands which have suspended operations in Russia, including its main rival H&M, following the invasion of Ukraine and the imposition of economic sanctions.

“Under the current circumstances, Inditex cannot guarantee the continuity of operations and business conditions in the Russian Federation and is temporarily suspending its activity,” the world’s largest fashion company said.

Russia accounts for around 8.5% of the group’s global EBIT (earnings before interest and tax) and all Inditex stores operate on a rental basis, Inditex said. “The investment is irrelevant from a financial point of view”.

Inditex said it would give its workforce of more than 9,000 people a special support plan, without giving details. The group had said its 79 stores in Ukraine had already been temporarily closed.

Spain’s second-biggest fashion retailer, Mango, announced on Thursday that it was temporarily closing its 120 Russian stores, and Tendam, the third-largest clothing group, said it made a similar decision on Saturday.

“The combination of a weak ruble leading to steep price increases for the Russian consumer and increased logistical difficulties will make it difficult for all retailers importing into Russia to operate, even if there are no direct sanctions on their categories. of products,” said Adam Cochrane, analyst. at Deutsche Bank Research, said.

“Russia has been an important part of sales growth in 2021 for Inditex,” Cochrane added.

(Reporting by Corina Pons; Editing by Louise Heavens and David Holmes)

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