Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Inditex’s chief executive has declared that the conditions for the Zara owner to return to Russia are “certainly not” in place, more than two years after it sold its local business following the invasion of Ukraine.
Asked what the right circumstances would be for the group to re-enter the market, Óscar García Maceiras told the Financial Times: “An environment that is not the current one, of course.”
García Maceiras’s comments are the latest indication that multinationals are not rushing to return to the Russian market, despite an earlier proclamation by Russia’s chief investment envoy that western companies would begin coming back by June this year.
Few international companies that left Russia would be better placed to return than Inditex, which previously counted the country as its biggest market outside Spain, accounting for 8.5 per cent of global earnings prior to the company’s departure.
In early 2023, it sealed a deal to sell its Russian business for a “not significant” sum to members of a Lebanese family that run the Spanish group’s franchise in the Middle East.
But the terms of the sale included an obligation for the buyer, the so-called Daher group, to “immediately” set up a Russian franchise agreement for Inditex with the transferred stores should the Spanish company choose to return.
The FT reported this year that Maag, a brand set up by the buyer of Inditex’s Russia business, is selling near-identical products to Zara, and that the new owner relies on the same suppliers as its predecessor.
García Maceiras said “there is a plurality of suppliers” in the apparel market. “We have suppliers who work for us. We never look for exclusive suppliers. So they work for us and for any other actor in the industry. We have no further comment.”
On the similarity of products, he said: “This is a sector where, in the end, the trends are global trends. Absolutely any market player can identify through the website of any other player what the trends are . . . That is part of everyday life.”
García Maceiras said any decision to return to Russia would only come in a “more favourable geopolitical environment. But at the moment the conditions are certainly not right.”
Russia’s deputy finance minister Ivan Chebeskov told domestic news outlet RBC this week that no western group had asked to return to the Russian market. “We haven’t seen any requests from companies that left for now,” Chebeskov said. Instead, the country was seeing “dozens” of requests for companies still looking to exit, he said.
While earlier this year Vladimir Putin was ordering the government to examine the conditions for western companies returning, the Russian president and top officials have increasingly indicated that they are not eager for multinationals to come back and may actually block them from doing so.
Russian lawmakers in May introduced a law that would allow domestic businesses to break their buyback agreements with western companies if the deal took place before the 2022 full-scale Ukraine invasion and the pre-agreed price was below the asset’s current value.
Meanwhile, Russian businesses have seen an uptick in the number of government-approved appropriations — a potential warning sign to any businesses looking to return.
A Moscow arbitration court ruled this week in favour of the forced nationalisation of Domodedovo — one of the country’s biggest airports and the largest asset set to be handed back to the state so far.
