According to a Reuters article, German luxury fashion brand Hugo Boss sold its Russian operations to Stockmann JSC. Stockmann JSC is a long-standing wholesaler partner. The company did not disclose the price.
Hugo Boss joins a number of Western brands that have left the Russian market due to the war in Ukraine.
Hugo Boss suspended all retail activities in Russia after the Russian invasion of Ukraine, in February 2022.
It also stopped its online business and all advertising on the Russian market.
Hugo Boss confirmed the purchase to Reuters.
We can confirm the sale of our Russian branch to Stockmann JSC, a longstanding Hugo Boss wholesale partner in Russia.
Details of the deal and its financial terms
Russian laws require that, even though neither party revealed the terms of the agreement, foreign firms must sell their assets for a minimum discount of 50%.
Stockmann JSC owns 100% of Hugo Boss Rus. The nominal value is 40 million Rubbles (470,588).
Stockmann JSC has not responded to comments immediately.
Hugo Boss was under pressure by organizations such as B4Ukraine. This coalition of civil societies groups urged Western companies to break ties with Russia.
Hugo Boss insisted that, despite these pressures from its Russian wholesale partners, it met its contractual obligations.
The company announced its April earnings in April.
In terms of wholesale, we met our contractual obligations with our partners. Hugo Boss has always complied with EU sanctions.
Many companies pull out of Russia due to the Ukraine crisis
The exit of Hugo Boss from Russia fits into a larger trend whereby Western brands are leaving the Russian Market due to geopolitical implications of the Ukraine Conflict.
Ford Motor Company suspended operations in Russia in 2022 and then, a few month later, sold its 49 percent share of the Sollers Ford Joint Venture.
Ford said that it is “deeply worried about the current situation in Ukraine” and has “a large contingent of Ukrainians who work at Ford throughout the world.”
Toyota announced that it would stop production in Russia in 2022 and cease exports in the wake of Russia’s invasion. This war affected Toyota’s purchasing of parts and materials.
The Russian government entity NAMI was reportedly interested in acquiring the St Petersburg facility of the firm.
Boeing and Airbus are also among the companies that have put a halt to their Russian operations. Apple was the first manufacturer to stop its sales of products in Russia.
Airbnb has also suspended its operations in Russia, Belarus and Ukraine.
In a report published by the Yale School of Management, over 1,000 companies publicly declared that they would be voluntarily curtailing their operations in Russia beyond what was legally mandated by international sanctions.
Some companies, however, continued to do business in Russia without being deterred
It’s business as usual for the American clothing brand Guess.
Impact of exiting companies on financial impact
According to a Reuters report published in March of this year, foreign companies that left Russia after the invasion by Ukraine in 2022 have lost an estimated $107 billion.
Losses were incurred due to revenue losses and write-downs because the regime of President Vladimir Putin implemented increasing punitive measures against exiting companies, such as selling assets at 50% off and donating at least 10% from their proceeds to federal budget.
Washington calls such payments exit taxes.
As new developments unfold, this post Hugo Boss exits the market after selling Russian business to Stockmann and sells Russian businesses to Stockmann may be updated.
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