Inditex sells its Russian business. The owner of Zara has informed the National Securities Market Commission (CNMV) that “she has reached an initial agreement for the sale of her business in the Russian Federation to the Daher group, which has significant holdings in the distribution and real estate sectors ”. It does not point, however, the cost of the operation.
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The company chaired by Marta Ortega acknowledges that the terms are subject to “prior administrative authorization” and that they will allow “preserving a substantial part of the jobs” of the Spanish multinational in Russia, by including “the transfer of most of the premises occupied until now by their stores”. Some establishments that, he clarifies “will house brands owned by the buying group totally unrelated to Inditex”.
Possibility of collaborating in the future
On the other hand, the doors to return to Russia are not completely closed. “In the event that new circumstances arise in the future that, in Inditex’s opinion, would allow the return of the group’s brands to this market.” Specifically, he assumes that Inditex and the Daher group contemplate in the agreement the possibility of a “collaboration between the two through a franchise agreement”.
As for who the buyer is, it is a group based in the Emirates, focused on the textile distribution business and real estate activity. Among its investees is Azadea, which is currently the franchisor of Inditex brands in the Middle East and in African countries.
Inditex announced its cessation of activity in Russia on March 5, after the invasion of Ukraine and the first days of the war. Then, it “temporarily” suspended its activity in the 502 stores (of which 86 were from Zara) and in the country’s online channel, as indicated at the time. More than fifty stores and nearly 9,000 workers in an activity that accounted for 8.5% of the group’s global operating profit (Ebit). In 2020, the financial year impacted by the pandemic, it was 86 million euros. A year earlier, in 2019, the Russian market contributed about 230 million to its result.
At the end of the first quarter of its current fiscal year, Inditex reported that it had provisioned 216 million euros to meet the extraordinary expenses of the cessation of activity, both in Russia and in Ukraine.
Now, as reported to the CNMV, “it estimates that the provision recorded in the financial statements in the first half of 2022 substantially covers the impact of the group’s cessation of activity in the Russian Federation”, without going into more detail.