Oscar Garcia Maceiras, CEO of Spanish conglomerate Inditex, owner of clothing brands Zara, Pull & Bear, Massimo Dutti, Oysho, Bershka and Stradivarius declarationHe said the company wants to return to Russia if the situation changes.
Previously, the trading network sold its business in Russia to the UAE-registered Daher group. But the terms of the deal provide the possibility of Inditex reopening in Russia in partnership with a new business owner.
“If we decided to continue our activities in Russia because the situation has changed – and of course I don’t think that will happen in the short term – we can continue our operations in the stores we have transferred to Daher. Group,” the CEO said in an interview with the Financial Times.
According to him, if he returned to the Russian market, Inditex would “operate in their own format” and the Daher group would operate as a franchisee.
He also told the Financial Times that the company plans to grow its business in the US and use most of its €1.6 billion planned capital expenditure for 2023 to open or expand stores worldwide.
Return with a new name
At the end of October 2022, it was learned that Inditex’s business in Russia was sold to the Daher group. The amount of the transaction was not disclosed, but one of its conditions was that Daher Group would have the possibility of potential cooperation through a franchising agreement should Inditex return to the Russian market. Also, Inditex has banned the sale of any of its products in Daher stores, but experts believe there is a risk of importing goods from other countries and being counterfeit.
In November 2022, Daher announced that they would operate in Russia under its own brand.
On March 10, the Mash Telegram channel wrote that Bershka and Pull & Bear may return to Russia in April 2023 with new names. According to Mash, Bershka will operate under the Ecru name, while Pull & Bear will be renamed DUB. In this case, the cost of goods will not increase.
“Now the company is looking for former employees and offers to return to familiar premises,” the publication said.
According to employees quoted by Mash, wages will be 192 rubles per hour and bonuses from sales. The companies are allegedly hiring 4,500 people.
January newspaper “Kommersant” It reported that Daher Group could open stores under its own brands in the spring of 2023. According to the source of the publication, the point in the shopping center “Aviapark” in Moscow will open first.
Kommersant reported that the Maag store will feature women’s, men’s and children’s clothing that “may have been created with the participation of Inditex representatives”.
The publication noted that in October Inditex’s Russia division changed its name from Zara CIS to New Fashion. At the same time, since December, New Fashion has registered vilet, dub and ecru domains in addition to the word maag in its name.
Anna Lebsak-Kleymans, CEO of Fashion Consulting Group, said these stores may hold collection offerings produced by Inditex on behalf of the Daher Group. At the same time, the expert believes that the new owner of the Russian business Inditex will face a decrease in purchasing power, an increase in logistics costs and the complexity of international transactions.
According to FCG forecasts, in 2022, sales of clothing, shoes and accessories in Russia decreased by about 10% annually to 2.4 trillion rubles.
The stores of the Inditex group suspended their work in Russia on March 5, 2022, due to the start of a military operation in Ukraine. Before that, the Russian market, with 502 stores and 9,000 employees, was the second largest market for the company after Spain. Russia accounts for approximately 8.5% of the group’s global EBITDA.
After the end of business in the Russian Federation, the US market became the second largest market for Inditex in terms of sales.
Zara owner earnings hit a record high in 2022, according to Inditex report. Compared to 2021, its sales increased by 17.5% to 32.6 billion euros, and its net income increased by 27% to 4.1 billion euros, according to the company.