One of Europe’s largest DIY retailers, Leroy Merlin, has made a surprising announcement regarding its stores operating in Russia. The company has revealed that it plans to sell its Russian assets to local management and exit the market. The Russian market is Leroy Merlin’s second-largest, with over 100 hypermarkets in more than 60 cities. The company entered the Russian market in 2004, and its Russian subsidiary is called “Lerua Merlen Vostok.” The company’s decision to leave the market has surprised many, as it had previously refused to do so.
Reasons Behind the Exit
The transfer of control over Leroy Merlin to local management is intended to preserve jobs for 45,000 employees and ensure that the company continues to serve the population. However, the agreement still needs to be approved by Russian regulatory authorities. The National Anti-Corruption Agency had previously added the company to the list of international sponsors of the war, which may have influenced its decision to leave the market. Leroy Merlin’s parent holding company, ADEO, has warned that the exit from the Russian market will have a significant impact on the company’s finances.
Foreign Companies Leaving Russia
Leroy Merlin’s announcement comes in the wake of many foreign companies leaving the Russian market. On March 10, it was reported that Austrian company Swarovski was completely leaving the Russian market. Swarovski specializes in the production of loose crystals, jewelry, crystal figurines, and the cutting of synthetic and natural gemstones. Earlier, many beauty and luxury foreign companies had already left Russia, including French cosmetics company L’Oreal, which owns popular brands such as Garnier, Maybelline New York, Lancome, Vichy, NYX, and others. Estée Lauder, which owns brands such as MAC, Clinique, Bobbi Brown, Jo Malone, and others, also ceased operations in Russia. Rolex, Ferrari, and Lamborghini had already suspended their operations in Russia in March 2022.
EU Sanctions Against Russia
The new package of sanctions tightens restrictions on the export of critical technologies and industrial goods such as electronics, specialized vehicles, machine parts, truck spare parts, rocket engines, some construction materials, and others. Additionally, seven Iranian companies that supply drones to the aggressor country were added to the sanctions list for the first time. On February 25, the European Union imposed its 10th package of sanctions against Russia. The sanctions list includes companies and individuals involved in the ongoing conflict in Ukraine. The sanctions are part of a wider effort to pressure Russia into changing its behavior in Ukraine. The continued imposition of sanctions on Russia may have contributed to the decision of foreign companies to exit the Russian market.
In conclusion, Leroy Merlin’s decision to exit the Russian market is a significant development in the ongoing trend of foreign companies leaving the country. The exit will have an impact on the company’s finances, and the transfer of control to local management still needs to be approved by Russian regulatory authorities. The continued imposition of sanctions on Russia by the EU is part of a wider effort to pressure the country to change its behavior in Ukraine, and it may be contributing to the trend of foreign companies leaving the Russian market.
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