Zara parent company Inditex will sell its business in Russia, after shuttering their doors seven months ago.
In a filing with Spanish regulators after market close, Inditex said it has reached an initial agreement with Daher group to take over its stores there.
“Daher group has prominent interests in the retail and real estate industry,” the company said in a statement. “The terms of the transaction, subject to government approval, will enable the preservation of a substantial number of jobs generated by Inditex Group in Russia, as it includes the transfer of most of the lease contracts related to stores.”
Financial terms were not disclosed.
Before the locations closed at the start of the war in Ukraine, Inditex operated 502 stores in Russia, including 86 Zara doors. It is also the parent company of Bershka, Massimo Dutti, Oysho, Pull&Bear and Stradivarius.
The properties will no longer house Inditex brand stores, it added. “Subject to agreement by the landlords, these premises will accommodate stores of brands owned by the buyer group, unrelated to Inditex. The transaction will mean the termination of Inditex’s operations in the Russian Federation.”
However Inditex said the deal with Daher leaves the door open, if circumstances within Russia change, to reopen stores under a “potential collaboration through a franchise agreement.”
In results reported in September, Inditex hit a historic high with sales soaring 24.5% in the first half of 2022, while profits were up 41%. Gross margin was up 57.9%, marking the strongest first half in seven years, despite the Russia closures.
Prior to closing its operations, Russia accounted for roughly 10% of its global sales. The company took a write-down of 216 million euros related to closing stores in the first half of the year.
“Inditex estimates that the provision included in the first half 2022 financial statements sufficiently covers the impact of the termination of the Group’s business activities in the Russian Federation,” the company added.
This story was reported by WWD and originally appeared on WWD.com.