US sports heavyweight Nike is leaving Russia following suspending operations in March, according to reports on Wednesday. It’s a symbolic new beginning for a major American brand, as multinationals like McDonald’s and Starbucks sever ties with Moscow following the invasion of Ukraine.
Highlights
- While Nike temporarily closed most of its stores in Russia in early March and withdrew its sponsorship of popular soccer club Spartak Moscow, a number of independent but licensed retail stores remained open.
- Inventive Retail Group (IRG), Nike’s largest franchisee in Russia, said the sportswear brand had suspended deliveries and stocks were running low, according the Russian daily newspaper Vedomosti on Wednesday.
- IRG, which operates 37 of the remaining 56 authorized Nike stores in Russia, also said the brand did not renew his contract and did not offer him a new one.
- The existing agreement between the company and Nike is due to expire on Thursday, according to Vedomosti.
- Nike told Forbes it made the decision not to renew or make new business commitments in Russia “due to operational challenges in Russia,” including deals with franchisee Up&Run, a subsidiary of IRG. .
- IRG did not immediately respond to Forbes’ request for comment.
Key Context
Nike, like many recognizable Western brands, was quick to disavow Russia over the war in Ukraine. However, it is one of a small minority of companies – including Burger King, hotel group Marriott and UK supermarket Marks and Spencer – that have struggled to fully extricate themselves from the Russian market due to complex franchise agreements. . Three months following Moscow launched the invasion, more and more companies are moving from suspending their activities in Russia to leaving the country altogether, including two iconic American brands, McDonald’s and Starbucks, and French carmaker Renault. . Russian President Vladimir Putin has threatened to retaliate once morest companies that suspend operations or leave the country and said he would nationalize their assets. Renault marks the first major nationalization of the assets of a Western company following handing over its factory to the city of Moscow, apparently for the symbolic sum of one rouble.
Tangent
British retailer Marks and Spencer, also known as M&S, announced on Wednesday that it is pulling out of the Russian market altogether due to the war. Like Nike, franchise agreements had prevented him from leaving Russia altogether. The company said it ceased shipments to Russia on March 3 and made arrangements to end the franchise agreement. The company said it will bear a charge of $38.7 million (€36 million) for his departure.
Article translated from Forbes US – Author: Robert Hart
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