French group Adeo to transfer Leroy Merlin Russia to local authorities
Adeo, the owner of the Leroy Merlin construction chain, announced that its Russian operation will pass into the hands of local government. The statement is published on the group’s official site.
“After more than 18 years of activity in Russia, handing control of Leroy Merlin to local leadership will create jobs for about 45,000 people and keep the company serving the best interests of residents,” the message notes.
Adeo said it has been moving toward transferring store management to Russian leadership for several months. This continues a process that began after Western sanctions were imposed in 2022, during which the group suspended new investments in Russia.
The announcement adds that the agreement will receive approval from Russian supervisory authorities and that Adeo will act to protect the welfare of its employees.
A representative of the French holding company told RBC that the shift to local control will not disrupt the operations of the home improvement chain and that all workers will retain their jobs.
The Leroy Merlin network in Russia operates 111 stores across 65 cities and ranks among the country’s top 10 retailers per InfoLine Analytics. In 2022, the network generated about 530 billion rubles in revenue, up about 15 percent from the previous year.
In March 2022, French authorities advised firms to consider strategies rather than abruptly leaving the Russian market, even with sanctions in place. Finance Minister Bruno Le Maire suggested that during a crisis it may be wiser to pause activities rather than exit quickly and unilaterally.
Following that, Leroy Merlin indicated it would stay in the Russian market. By January 2023, Adeo reported it had halted all new investments in Russia in line with international constraints following the start of the Ukrainian conflict.
Rumors have circulated over the past year about another French retailer, Auchan, possibly closing its Russian stores. Media reports first appeared in March 2022, but Auchan officials later denied the claims, describing them as attempts to destabilize the market.
Yves Claude, the managing director, stressed continued operation in Russia despite criticism from Ukrainian officials and calls to suspend activities. The primary reason cited is the need to protect staff and ensure the population is fed, reflecting the group’s stated mission.
In January 2023, the French retailer Decathlon announced a final withdrawal from Russia, halting product supply last year and closing all stores.
Auchan, Decathlon, and Leroy Merlin are all associated with the AFM holding company controlled by the Mullier family, among France’s wealthiest clans.
In many major Russian cities, Auchan and Leroy Merlin rent space from IKEA and the Swedish Ingka Group, which operates the Mega mall chain. IKEA has closed all its stores since last year. Reports from RBC and Kommersant in February 2023 indicated Ingka Group plans to sell its entire real estate portfolio in Russia and is seeking buyers for these assets. Ingka Group stands as Russia’s largest commercial real estate owner, with roughly 2 million square meters of shopping space. Estimates place the property portfolio value around several billions of dollars, though the market context has shifted with numerous exits from Russia and adjusted valuations. A full sale is expected to occur with phased payments and possible discounts reflecting market conditions. [Citation: RBC; Kommersant]