After operating in Russia for 23 years, popular fashion company Mango has decided to permanently withdraw from direct sales in the country. The decision comes as a result of the geopolitical uncertainty following the invasion of Ukraine. In March of this year, Mango temporarily suspended its operations in Russia due to the ongoing war, resulting in the closure of 55 owned stores and the suspension of online sales.

To protect the wellbeing of its 800 employees in Russia, Mango has reached an agreement with its franchise partners to transfer its business to them. Over the next few months, the company plans to hand over its current stores in Russia to various franchise partners. It has set aside 20 million to account for the impact of the situation and the transition process. The first two stores will be sold next week, with an additional 22 stores expected to be added in the following month.

Russia was previously one of Mango’s top five markets, accounting for 8% of its earnings before interest and taxes (EBIT) until 2021. As the company gradually reopens its stores in Ukraine, it is taking precautions to ensure the safety of its teams. The reopened stores are located far from the war zone, and security protocols are being analyzed.

Throughout the war, Mango has provided support to its teams in Ukraine and Russia by continuing to pay their salaries and offering legal coverage. Additionally, the company has offered legal advice and new job opportunities in other countries to employees and partners who have chosen to leave Ukraine due to the invasion.

Mango’s decision to withdraw from direct sales in Russia after 23 years reflects the challenges faced by businesses in the current geopolitical climate. By transitioning its business to franchise partners, the company aims to maintain its presence in the Russian market while prioritizing the safety and security of its teams.

Useful links:
1. CNBC – Business as Unusual: How Geopolitics Impact Companies
2. Reuters – Business News