adidas is Closing 200 Shops in Russia
Adidas runs around 1,000 stores across Russia and the economic misery hit it hard.
The double whammy of cheap oil and Western sanctions sent Russian economy tanking. The ruble has collapsed — losing 40% against the dollar in just six months. GDP is expected to shrink by 5% this year, inflation is soaring. Adidas runs around 1,000 stores across Russia and the economic misery hit it hard. «Being the clear market leader, we have been particularly impacted by the economic downturn, deteriorating consumer sentiment», the company’s CEO Herbert Hainer said in a statement.
The company is the latest Western firm to announce it is scaling back its presence in Russia after the ruble dropped about 40 percent against the U.S. dollar last year. “Sales performance will be negatively impacted by a reduction of the store base in the market”, Adidas said in its annual report released last week.
“While we firmly believe in the long-term potential of the market, the short-term fundamentals of the business have changed materially due to the rapid depreciation of the Russian ruble in 2014 and the considerable risk of further deterioration in consumer spending”, the report read.
The German sportswear group said its net income for 2014 was around 650 million euros, around a third below the target. Adidas is not the first western company to scale down Russian operations. Fashion brands Esprit and River Island announced they would leave Russia.