The Inditex Group (which includes Zara and Bershka) is selling its Russian operations to the Arab Daher Group. The real estate group, based in the United Arab Emirates, already holds local rights to Inditex franchising. This allows the fashion giant to leave Russia, but keep the door open.
500 shops, 9,000 jobs
Inditex has reached an agreement to sell its 502 shops in the Russian market to the Daher Group, owner of the Dubai Mall and Inditex master franchise rights in the Middle East and North Africa. Most of the properties were leased by Inditex and will soon be occupied by Daher-owned brands. The UAE and other Gulf states are considered friendly countries by the Kremlin, so Arab companies are encouraged to do business in Russia. A significant part of the approximately 9,000 jobs created by Zara’s parent company in Russia would be taken over by the acquirer.
Initially, Daher plans will be shops with no connection to Inditex, but the Spanish fashion giant is keeping the door ajar. The contract foresees a possible cooperation through a franchise agreement, if circumstances allow it in the future. So Zara will simply return to Russia as soon as it can, but through a franchise.
Return already planned
A clever move, as Inditex gets rid of all the leases and costs in Russia at once, but can quickly pick up the thread in the country, without too much investment and risk. Russia was its second largest market, but following the invasion of Ukraine and the start of the accompanying Western sanctions, the group closed all its shops there in March.
On the cost front, Inditex remains on the surface. The 216 million euros that the fashion group has earmarked for withdrawal from Russia and Ukraine in the first half of 2022 would more than cover the costs incurred. Competitor Mango is also reportedly in talks with local partners to relocate its Russian shops.