Zara-owner Inditex obtains approval to sell business in Russia

Inditex, owner of the Zara clothing chain, has received permission from Russia to sell its business in the country that was once its second-biggest market by number of stores.

Daher Group of the United Arab Emirates will be acquiring the business from the world’s biggest fashion retailer. Russia’s commission on foreign investments, the approval of which every western company exiting the country requires, authorised the sale at the end of March. The decision was confirmed on state television on Wednesday.

It comes five months after Inditex announced a preliminary agreement with Daher and more than a year after it suspended its Russian operations following Moscow’s full-scale invasion of Ukraine, highlighting the protracted journey many foreign businesses have faced as they leave the country.

The deal was announced by deputy trade minister Viktor Evtukhov, who described the buyer as Fashion And More Management DMCC, which “has an office in one of the [countries friendly to Russia]”. The company was set up by Daher for the deal, a person close to the transaction told the Financial Times.

Inditex, whose brands also include Bershka and Pull&Bear, had 514 stores in Russia according to its 2022 annual report, with 245 included in the sale. The rest of the company’s stores in the country are expected to close.

Inditex declined to comment.

The transaction amount was not disclosed and the sale is yet to take place, Russia’s corporate registrar shows.

Since last year, companies from so-called unfriendly countries have required the approval of Russia’s commission on foreign investments to sell their assets there. Basic approval criteria include selling at a minimum of 50 per cent discount and making a direct “voluntary contribution” to the Russian state.

The sale’s main condition was the preservation of jobs, Evtukhov said. “The group currently employs 4,200 people, and the representatives of the new owner confirmed they are keeping them,” he added, although Inditex had more than 9,000 employees in Russia according to its latest estimate.

Inditex chief executive Óscar García said in March that the company remained willing to return to Russia if “the situation changed”, although he admitted this was unlikely to happen in the short term.

The stores will reopen before the end of spring under several new brand names. “Collections with new tags have already been sewn and brought to Russia,” said Evtukhov.