The American brand Guess has acquired its Russian partner’s interest in an unusual transaction.
Following the US Treasury Department’s approval of the transaction, the clothes maker and retailer purportedly acquired its 30 per cent stake back from local partner Vyacheslav Shikulov for € 8 million (US $ 8.5 million) and integrated all of its operations in Russia.
The parties had agreed to a ‘put option’ deal at the end of 2015, which gave Shikulov the right to sell his 30 per cent ownership in a local company and required the American company to buy it out by 31st December 2025. Shikulov exercised the option in November 2022, and Guess then submitted a buyback request to the US Department of the Treasury’s Office of Foreign Assets Control (OFAC).
The US clothing giant’s action is unusual given the state of the market, according to specialists in the field, who noted that the great majority of foreign businesses leaving Russia are looking to sell their assets to domestic buyers. They said that the deal might be a reflection of the retailer’s worries about keeping up its operations in Russia.
Uniqlo has decided to close the majority of their stores in Russia after experiencing multi-million dollars losses. H&M, a Swedish clothing company, suffered losses of approximately US $ 363 million last year, while Inditex, a Spanish apparel giant that owns brands including Zara, Bershka, and Massimo Dutti, suffered losses of over US $ 300 million. Decathlon is a French sports goods manufacturer that lost approximately US$140 million. Both the French Hermes rival and luxury Italian clothing store Moncler lost more than US$200 million.
In the Zara case, Inditex sold its 245 Russian stores and left the market. Daher Group of Dubai is a large clothing retailer. Zara and Massimo Dutti are no longer available in the Russian market. Maag Dub Ecru Vilet, will be their replacement.
The supply networks used for these new brands and the design process will be the same. European designers are retained in order to keep a uniform look. Inditex’s supply chains have their headquarters located in countries like Bangladesh, India and others.