Zara-owner Inditex says to sell Russian stores

People walk inside a Zara store (File photo/ Reuters)

Spanish fashion retailer Inditex said Tuesday it would sell its business in Russia, seven months after the Zara-owner halted its operations in the country following the invasion of Ukraine.

"Inditex has reached an initial agreement for the sale of its business in the Russian Federation to Daher group, which has prominent interests in the retail and real estate industry," Inditex 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," it added.

Inditex decided in March to shut its 502 stores in Russia, one of its biggest markets after Spain, accounting for 10 percent of company sales.

It followed in the footsteps of some of the biggest Western brands which also suspended their operations in Russia, including Inditex's main rival H&M, following the invasion of Ukraine and the imposition of economic sanctions.

Inditex said the sale of its business to Daher group "will mean the termination" of its operations in Russia.

"If in future Inditex considers that new circumstances allow the return of the Group’s brands to this market, Inditex and the Daher group have the option of a potential collaboration through a franchise agreement," the statement added.

Inditex, which also owns Massimo Dutti and other brands, posted a net profit of 1.8 billion euros in the first six months of 2022, a 41-percent increase from the same period last year.