Within days of Zara Putin’s full-scale invasion of Ukraine in 2022, Zara’s owner Inditex announced the “end” of Russian operations, which appears to be a clean break from the largest market by non-Spanish stores.
However, the details of its exit remain the world’s largest fashion group. The Berschka, Pull & Bear and Stradivarius brands also existed in the country, but are well placed if you choose to return.
In early 2023, Inditex injected cash into its Russian business. Now called the new fashion, and according to the company’s declaration and company statement, it’s just before it sells for a “not significant” price to members of the Lebanese family who run the Spanish group’s franchise in the Middle East.
Buyers have established exchange brands rely on the same suppliers and sell the same products close to Inditex, employing previous staff. And under the terms of the contract, Inditex is not free to convert the contract into a franchise arrangement that “quickly” returns the transaction to the previous Russian store.
“This looks like a playbook similar to the withdrawal of other ‘boomerangs’. Or where the foundations came out when the flavor was laid out,” said Christian Laslett, a professor at Ulster University who studied the departure of western companies from Russia.
Inditex told FT that it did not participate in or support it in any way in the previous Russian business, saying, “The purpose of the transaction was to sell our business.
Inditex was part of the first wave of Western companies to halt business in Russia following a full-scale invasion of Ukraine in February 2022, and suspended operations in the country nine days after the assault began.
Eight months later, it said in an announcement that reveals most of the further details about the transaction, that it will sell the business to “Daher Group” for a private amount.
Although there is no entity called Daher Group, Inditex told FT it used a phrase indicating that the buyer is “part of a group of investment companies belonging to the Daher family.”
Zalas Store in Nevsky Prospect, St. Petersburg 2020 © Natalia Rumyantseva/Dreamstime
The entity managed by Daher, who currently owns Russian businesses – a company called Mixed R DMCC whose website promises “continuity of an exceptional fashion journey” was incorporated in September 2022. Soon after that, they created a new brand that currently occupies many of the 243 Russian stores included in the deal. The former Zara, Pull & Bear, Bershka and Stradivarius shops are branded Maag, Dub, Ecru and Vileet, respectively.
Trade data show that three of Inditex’s main suppliers are also the top suppliers of R Mixed, a subsidiary of Mixed R in 2023 and 2024, the new owners rely on some of the same companies as the Spanish group.
Inditex said it is a normal practice in the industry for various retailers to use the same suppliers, and “proactively guarantees the total exclusiveness of all products the brand sells.”
However, many of the designs of the new Russian brands are very similar to Zara and other Inditex branded products, images from the company’s online store show. Inditex said it would not comment on the designs of other brands.
Mixed R claimed that it had no connection to Azadere and that its “creative design and purchasing capabilities will be handled by an independent team in Dubai.” Azadea and Mixed R DMCC say they are “a completely independent entity, with different stocks and no business related to them.”
According to Corporate Records, Mixed R is jointly owned by Hassan Galebdah and Mohamed Arigalebdah, two of the four siblings who co-own Azadha.
Beyond item similarities, MAAG’s first social media campaign for the launch of the Spring/Summer 2023 collection was filmed around the same time in the same location as the Zara collection. Both were filmed in Lanzaroto by the same Spanish production company, according to the brand’s Instagram post. Inditex said Lanzarote is “a common and frequent destination for image productions in the fashion industry.”
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In December 2022, two months after the agreement was announced, Inditex amortized RBS 910 million loans and subsequently about 120 million euros of interest to its Russian businesses.
Nataliia Rybalko, a Kyiv economics researcher who studied the multinational exit from Russia, said he could not consider other examples of putting money into the Russian business that western companies sell.
“On the contrary, when you leave Russia, companies will withdraw as much money as possible before they sell,” she said.
Paul Ostling, former global chief operating officer of EY, served as chairman of the audit committees for many previously listed Russian companies, but said it was “common sense and operational” to “not normally invest in the assets you are discarding.”
He noted that New Fashion’s 2023 financial statements show Inditex classified assets as non-current as they were sold when the assets were injected. “So why did you put cash into assets that you hold for sale at no current?”
Inditex had a significant operating costs for its business, but no sales. The obligation “Employees, local governments, landlords, etc., that the company must meet even if it is for sale” and injecting capital into the business was consistent with that situation.
Trade data shows that between the closing of Russian businesses in March 2022 and sales in April 2023, they received over 800 apparel shipments from future buyers in the Middle East.
Inditex said it agreed to Dahhars that the new fashion would import the goods before the sale was confirmed “to promote the rapid opening of buyers’ businesses in Russia.”
Although Inditex and R-Mixed refused to disclose terms of sale or how much money changed hands as Spanish groups calculated the “feasible value” of their Russian business was 183 million euros in January 2023.
Asked about revenue from sales, Inditex pointed to the 2,31 million euro cost of terminating its Russian business, saying “the revenue generated from sales is not important.”
Moscow’s former Zara clothing brand flagship store has reopened with new branding MAAG© Kiril Kudryavtsev/AFP/Getty Images
Those familiar with the Western retailer’s business in Russia said Inditex’s arrangement with Dahers is unusual in that it does not include traditional buyback agreements.
Instead, the so-called Daher Group is “obligated” to arrange a franchise agreement for Russian Inditex “quickly” and “quickly” if market conditions change, according to the disclosed terms of the transaction.
Dozens of InditeX employees, including designers, brand directors and buyers, moved to the UAE to work for the so-called Daher group in their new business, according to people familiar with arrangements.
According to the LinkedIn page, nine Inditex staff members moved before the contract ended in 2022, but the rest have since joined several Inditex alumni employed by the UAE. According to LinkedIn, one person who was hired by Inditex in March 2023 as Mixed’s shoes head as head of shoes, rejoined the Spanish group last month.
Inditex said it provided over 800 spontaneous leaves in 2024. This is a figure in line with the previous year’s average, noting that such status is not given by the employer under Spanish labor law, but is a “worker’s rights that the employer must acknowledge.”
At least one employee of the Dubai-based holding company remains on Inditex staff during their holidays, according to people familiar with the structure of the Inditex-Daher arrangement.
Previously unreported details regarding the sale of Inditex’s Russian operations suggest that the Spanish group is positioned to re-enter the Russian market than most Western retailers.
Russian media reported this year that Inditex could soon return to the market amid a wider settlement between Moscow and the US, but those working with Western Russian companies have rejected the premature report. Inditex declined to comment on what it described as “misleading rumors.”
“This appears to be part of a pattern I have observed in several other cases where companies have left Russia and assets are listed in the names of these carefully curated holding companies.
“Russia has been a very profitable market for some of these Western companies, including these kinds of setups.
Inditex said its financial statements “will provide a clear, accurate and detailed description of the transaction.” It added that “we do not comment on opinions, understandings or conclusions that are not based on an informed and accurate analysis.”
Additional Reports by Chloe Cornish of Dubai
