US fashion brand ‘Estimation’ regains Russian business: analysis

American fashion brand Guess has announced that it has regained share from its Russian partner in an unusual move for the Russian fashion market. Kommersant.

The clothing manufacturer and retailer bought back a 30 percent stake from local partner Vyacheslav Shikulov for 8 million euros ($8.5 million) and is said to have consolidated 100 percent of its Russian business after approval by the U.S. Treasury Department.

In the year In late 2015, the parties signed a ‘placed option’ agreement that gives Shkulov the right to sell his 30% stake in the domestic business and obliges the US company to buy the stake until December 31, 2025. option in November 2022, and Speculation requested authorization to return to the US Treasury’s Office of Foreign Assets Control (OFAC).

The move by the US apparel giant is typical of current market conditions, with most Western companies leaving Russia looking to sell their assets to local investors. The deal may reflect the retailer’s concern about continuing its Russian operations, he added.

In the year Gas revenue in Russia will increase by 24% to 4 billion rubles ($49.9 million) in 2022, the data shows. Following pressure from their government, many foreign products and businesses have changed hands and left Russia in the last 18 months, and many have incurred significant losses in leaving the country. Russian consumers are severing their former ties to Western brands, angered by what they see as consumer betrayal. Russian fashion consumer market It is estimated to be about 35 billion dollars in 2019 and is expected to grow by about 3.5%.

In terms of bankruptcy, earlier this month (May 2023), Japanese casual clothing retailer Uniqlo decided to sell most of its stores in Russia after suffering multi-million dollar losses. Last year, Swedish clothing brand H&M lost US$363 million, while Spanish clothing conglomerate Inditex – owner of brands such as Zara, Bershka and Massimo Dutti – faced a US$300 million loss. French sporting goods retailer Decathlon lost about $140 million, while luxury Italian retailer Moncler and its French counterpart Hermès lost about $200 million together.

But that doesn’t mean these businesses have. It is out of the Russian market or out at all. In the case of Zara, Inditex sold 245 stores in Russia and went out of business, which was bought by Dubai-based clothing retail giant Daher Group. The Zara, Bershka and Massimo Duti brands were banned from the Russian market, and the brand names were replaced by new ones – Maag, Dub, Ecru and Vilet.

However, the design work and supply chains used to supply these new brands will remain the same: European designers are expected to maintain style continuity with Inditex supply chains based in countries such as Bangladesh, India and others.

It is not clear what is behind the speculative decision – perhaps to resell the business in a deal similar to the one set up by Inditex. In this case, the renewal of the name of Speculation, the agreement not to use it in Russia, but we can expect that the supply chains invested by Speculation will continue to provide the new venture. A political solution is emerging as companies divest from Russia but continue to retain profitable supply chain components.

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