Inditex sells Russian business to UAE-based Daher Group
Following the rumours that have surfaced over the last few days regarding the potential sale of Inditex's business in the Russian market, the Spanish textile group has now confirmed the news in a note sent to the Comisión Nacional del Mercado de Valores (CNMV) on Tuesday, October 25.
"Inditex has reached an initial agreement for the sale of its business in the Russian Federation to the Daher group, which has relevant stakes in the distribution and real estate sectors," the company founded by Amancio Ortega briefly announced, detailing that the terms of this operation, subject to prior government approval, will "enable the preservation of a substantial number of jobs generated by the Inditex group in Russia."
With a network of 515 shops in the market, whose activity has been suspended since March 5 as a response to Russia's invasion of Ukraine, the Spanish company had around 9,000 workers in the country.
Although the financial details of the operation have not yet been disclosed, the company based in Arteixo, A Coruña indicated that the agreement includes the "transfer of most of the lease contracts" that until now had been occupied by the retail chain's shops with which it operated in the country: Zara, Massimo Dutti, Oysho, Stradivarius and Pull & Bear. Once the various agreements with the owners of the premises have been finalised, the shops will house the points of sale of the acquiring group's various brands and will be "totally independent of Inditex."
However, the company chaired by Marta Ortega did not want to close the door on a possible return of its activity to the country. "In the event that circumstances change in the future that, in Inditex's opinion, would allow the return of the group's brands to this market, Inditex and the Daher Group have included in their agreement a potential collaboration through a franchise agreement", explained the statement.
The new owner of the business is none other than the Emirati conglomerate that owns the impressive Dubai Mall. Among its subsidiaries is the Lebanese firm Azadea, a franchisee of the Spanish company in North Africa and the Middle East.
Although prior to the cessation of activity, Russia accounted for approximately 8.5% of the company's net operating income and its sales amounted to around €1 billion, or about 5% of total sales, Inditex estimates that the €216 million provision recorded in the first half of the current financial year "sufficiently covers the impact of the termination of the group's business activities in the Russian Federation."
After Spain, Russia was the largest market in terms of sales volume for the company headed by Óscar García Maceiras. Meanwhile, in Ukraine and Belarus, where the Spanish conglomerate operated with 85 and 13 shops respectively, activity remains suspended.
Over the last few months, after the first war-induced closure of the business, many companies in the fashion industry have progressively made decisions regarding the Russian market. While H&M opted for a definitive closure, other companies such as the Spanish brands Mango and Tous decided to hand over their physical shops to their local franchise partners.
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