Zara will change registration

As it became known to Kommersant, in order to resume work in the Russian Federation, the Spanish fashion group Inditex is considering the possibility of transferring Russian assets to partners from a “friendly” country, for example, from Southeast Asia or the Persian Gulf. Experts note that the group has already begun to optimize business in the Russian Federation and close unprofitable facilities. At the same time, most landlords are not inclined to terminate contracts with the company.

The fact that Inditex (brands Zara, Massimo Dutti, Pull & Bear, Oysho, Bershka, Stradivarius and others) plans to change the corporate structure of the Russian subsidiary – Zara CIS JSC, Kommersant learned from the ruling of the Arbitration Court of the Samara Region dated September 30 . It considers the claim of the owner of the shopping center “Cosmoport” in Samara to “Zara CIS”. It follows from the materials of the court that Inditex plans to transfer the Russian structure to a third company registered in a jurisdiction that the Russian authorities do not consider “unfriendly”. On October 17, Inditex’s global office did not respond to Kommersant’s request.

Inditex may transfer the Russian division to its franchisees from the countries of Southeast Asia or the Persian Gulf, Olga Antonova, head of the retail real estate department at the Commonwealth Partnership, does not exclude. A Kommersant source familiar with the fashion retailer’s plans notes that Inditex’s Russian assets may be transferred to the group’s partner from the UAE.

A similar scenario was previously implemented by the Polish retailer LPP (Reserved, Cropp, Mohito and Sinsay brands), which in July 2022 transferred stores in the Russian Federation to a company registered in the UAE and its top manager. At the same time, the points of sale of the fashion group resumed work, but under new signs.

Inditex announced the suspension of all stores and online platforms in Russia on March 5. Prior to that, 502 stores of the group operated in the Russian Federation. The Russian market accounts for about 8.5% of Inditex’s global profits.

According to Olga Antonova, the transfer of Inditex’s Russian business to partners will take from six months to one year. At the same time, according to a Kommersant source, Massimo Dutti, Oysho and Zara Home will completely leave the Russian market, and the rest of the brands will open under different names and with new collections no earlier than spring 2023. Another interlocutor of Kommersant notes that now Inditex is signing additional agreements with shopping centers in order to retain the occupied space until at least May 2023.

The company does not rule out the possibility of resuming work in the country after the end of hostilities in Ukraine, clarifies the interlocutor of Kommersant.

Nadezhda Tsvetkova, head of retail space leasing at the CORE.XP retail department, confirms that the owners of shopping centers are already actively negotiating with potential tenants at the sites where Massimo Dutti, Oysho and Zara Home stores used to be. Inditex is also ready to terminate contracts for such facilities, the expert says. Alexey Vanchugov, managing partner of Vanchugov & Partners, connects the possible optimization of Inditex’s portfolio in Russia with the desire to leave the most profitable projects in the country.

Most landlords are not inclined to terminate contracts with Inditex, in some cases negotiations have already begun to change commercial conditions, Nadezhda Tsvetkova notes. “Kommersant” also found in the filing cabinet of arbitration cases about ten responses to previously filed lawsuits by owners of commercial real estate against various Russian Inditex structures “in connection with the full payment by the defendant of the debt” for rental payments.

Mostly the owners of shopping centers who have already found a replacement for the Spanish fashion retailer terminate contracts with Inditex, says Ms. Tsvetkova. So, in early August, it became known that the Moscow “Afimall City” terminated the contract with Inditex ahead of schedule. According to Olga Antonova, the company may close some low-margin stores with an outdated concept in the Russian Federation. According to Ms. Tsvetkova, additional closures can be expected if the company does not agree with landlords on the amount of payments during store downtime and after the resumption of commercial activity.

Alina Savitskaya