The multinational reaches an agreement allowing it to keep “a substantial part” of the group’s jobs
Inditex has reached an agreement with the Daher group to sell its operations in Russia, the National Securities Market Commission (CNMV) reported on Tuesday. The Spanish multinational had been analyzing this possibility for weeks, although it was on the table that it could continue to work with Zara even if it changed its name.
Finally, the company founded by Amancio Ortega has decided to sell its entire business to the Daher group, which has significant interests in the distribution and real estate sector. The company said in the statement that, subject to prior administrative approval, the terms of this operation will allow it to “maintain a substantial portion of the Inditex group’s jobs in Russia.”
The multinational assured that the agreement – on which no economic details have been given – includes the transfer of most of the properties so far occupied by its stores. “Subject to agreement with the owners, these properties will house the future outlets of brands owned by the buying group, which are totally unrelated to Inditex,” explained the company, which has suspended its operations in Russia since March 5 due to the war with Ukraine.
However, they point out to Inditex that if there were “new circumstances in the future that would allow the group’s brands to resume in this market”, they are considering in the agreement with Daher the possibility of a “cooperation” between the two by a franchise agreement.
Just a week after the war broke out, Inditex decided to close its 502 stores in Russia (of which 86 Zara), the second largest market after Spain and where it had more than 9,000 employees. In addition, it suspended online sales in the country.
Russia represents approximately 8.5% of the group’s worldwide net operating profit (EBIT). In concrete terms, the pre-tax result of this market amounted to 86 million euros in 2020 (229 million euros in 2019), with a turnover of almost 5% of the total, which amounts to more than 1,000 million euros. However, in the statement sent to the CNMV, Inditex estimates that the provision recognized in the financial statements in the first half of 2022 largely covers the impact of the cessation of the group’s activities in Russia.
Inditex CEO Óscar García Maceiras said last week that the company continued to support its teams in Russia and Ukraine as they evaluated various alternatives. He also explained that the company provided EUR 216 million in June last year to cover estimated costs in both countries until the end of this year. Inditex has increased its sales elsewhere by 24% after the Russian market closed, company sources said.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
