The world’s biggest luxury brands suspend operations in Russia

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  • The French group Hermès has three stores in Moscow
  • Hermès “deeply concerned about the situation in Europe”
  • Russians spend $9 billion a year on luxury goods -Jefferies

PARIS, March 4 (Reuters) – The world’s biggest luxury brands said on Friday they planned to temporarily close stores and suspend business operations in Russia.

Bag maker Birkin Hermes and owner of Cartier Richemont were the first companies to announce such measures, followed by LVMH (LVMH.PA), Kering (PRTP.PA) and Chanel.

Doing business in Russia has become complex since Russia’s invasion of Ukraine, which prompted the United States, Britain and the European Union to impose sweeping sanctions.

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“Given our growing concerns about the current situation, the increasing uncertainty and the complexity to operate, Chanel has decided to temporarily suspend its activities in Russia,” the French luxury fashion house said in a post on LinkedIn.

Luxury giant LVMH, which owns brands such as Christian Dior, Givenchy, Kenzo, TAG Heuer and Bulgari, among others, will close its 124 stores in Russia from Sunday but will continue to pay the salaries of its 3,500 employees in the country. , said a spokesperson. Reuters.

French multinational Kering, whose brands include brands such as Gucci, Saint Laurent, Bottega Veneta and Boucheron, among others, has two stores and 180 employees, which the company will continue to support.

While affluent Russians are big consumers of luxury goods, analysts say the proportion of luxury sales generated by Russian nationals is low compared to the industry’s main growth drivers, China and the United States. .

Richemont, which also owns Dunhill, Jaeger-LeCoultre, Montblanc, Piaget and Van Cleef & Arpels among others, has a dozen stores of its own, mainly in Moscow. He said in a statement that he suspended business activities in Russia on March 3 after halting operations in Ukraine on February 24, the day Russia launched its invasion.

Hermes, which has three stores in Moscow, had planned to open an outlet in St. Petersburg later this year.

Investment bank Jefferies estimates that Russians account for about $9 billion in annual luxury goods sales, or about 6% of Chinese spending and 14% of US luxury goods spending.

Swiss watchmaker Swatch Group (UHR.S), which owns high-end watch and jewelry brands including Harry Winston, said it would continue operations in Russia but was suspending exports “due to the current situation. overall difficult.

L’Oreal (OREP.PA), LVMH (LVMH.PA) and Kering (PRTP.PA) have all pledged financial support to help Ukrainian refugees and Richemont announced on Friday that it was launching a “significant donation” to Doctors Without Borders.

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Reporting by Mimosa Spencer, Silvia Aloisi and Layli Foroudi; Editing by Tassilo Hummel, Jon Boyle, Susan Fenton, Alexander Smith and Sandra Maler

Our standards: The Thomson Reuters Trust Principles.

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