MADRID (Reuters) -Spanish fashion retailer Inditex has halted trading in Russia, closing its 502 shops and stopping online sales, the company said in a statement on Saturday.
The Zara owner is following 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.
“In the current circumstances Inditex cannot guarantee the continuity of the operations and commercial conditions in the Russian Federation and temporarily suspends its activity”, the world’s biggest fashion company said.
Russia accounts for around 8.5% of the group’s global EBIT (earnings before interest and tax) and all the Inditex stores operate on a rental basis, Inditex said. “The investment is not relevant 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 any details. The group had said its 79 stores in Ukraine have already been temporarily closed.
Spain’s second-largest fashion retailer Mango said on Thursday it was temporarily closing its 120 Russian shops, and Tendam, the third-largest clothing group, said it had taken a similar decision on Saturday.
“The combination of the weakness in the rouble resulting in large price increases for the Russian consumer and increased logistical difficulties will make operations difficult for all retailers importing into Russia, even if there are no direct sanctions on their product categories,” Adam Cochrane, analyst at Deutsche Bank Research, said.
“Russia was an important element of the sales growth in 2021 for Inditex,” Cochrane added.
(Reporting by Corina Pons; Editing by Louise Heavens and David Holmes)