Fashion Brand Zara Withdraws from Russia... Sells Business to UAE Company

[Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] Spanish clothing company Inditex, owner of the Zara brand, will sell its Zara stores in Russia to the United Arab Emirates (UAE) company 'Daher,' AFP reported on the 25th (local time).

Zara had already suspended operations in Russia 7 months ago following Russia's invasion of Ukraine. Zara has 502 stores in Russia, employing over 9,000 people.

Inditex explained that although the agreement is still in its early stages, since the store lease contracts will also be transferred, there will be a "significant scale" of employment succession.

Inditex stated that this deal means Inditex will cease operations in the Russian Federation. Additionally, they added that if the situation changes and they re-enter Russia, there is an option for Daher and Inditex to cooperate.

Russia accounts for 10% of Inditex's global revenue, and the number of Zara stores in Russia is the second largest after Spain.

Inditex achieved a net profit of 1.8 billion euros in the first half of this year, a 41% increase compared to the same period last year. Inditex stated that the increase in online sales and new store openings offset the losses from suspending operations in Russia.

Inditex also announced that it set aside a provision for doubtful accounts of 216 million euros in the first quarter of this year to cover losses from suspending operations in Russian stores.

This content was produced with the assistance of AI translation services.