Inditex finally can move ahead on the sale of its Russian operations to the Daher Group.
The deal between the two was disclosed in October, but it has been pending final approval by the Russian government. Daher, an Emirati conglomerate, will take over most of the 515 leased stores once the deal closes. The plan is for Daher to house its owned brands in the storefronts. There is a provision in the agreement that allows for Inditex and Daher to collaborate via a franchise agreement if Zara’s parent determines it feasible to reenter the Russian market.
Zara and other brands under Inditex’s umbrella originally suspended operations on March 5 following Russia’s invasion of Ukraine. The plan had been to resume operations in Russia and Ukraine when circumstances allowed. Russia accounted for about 8.5 percent of earnings before interest and tax, roughly 1 billion in both euros and dollars, and 5 percent of total sales.
Meanwhile, Inditex has been raising prices for some products as one way to manage rising costs. It also earlier last year implemented an online order returns charge at Zara, resulting in more web orders being returned at the chain’s stores.
In the most recent reporting period for the year ended Oct. 31, sales rose 17.5 percent to 32.6 billion euros ($35 billion).
A Bloomberg report said Russia’s commission on foreign investments approved Inditex’s withdrawal at the end of March, according to an interview on state TV with Deputy Minister of Industry and Trade Viktor Evtukhov last Wednesday.